Discussion:Business use of vehicle

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Discussion Forum Index --> Basic Tax Questions --> Business use of vehicle
Discussion Forum Index --> Tax Questions --> Business use of vehicle

Newarcher (talk|edits) said:

8 February 2008
Okay, I should be shot for asking such a basic tax question but I can't get my mind around this answer...I was up late last night.


I want to make sure I understand this exactly:


If a self-employed individual uses his personal vehicle in the business, he can deduct either the actual costs of operating the vehicle and depreciation (based on business % use) or take the standard deduction based on business miles. Since the vehicle is owner personally, any actual expenses incurred (regardless of the method of recapture used) would be funded from the owner's personal account and would not represent a book entry on the business books. It would be a tax entry only.


If the self employed person were to buy a vehicle in the business name, the company must use actual costs and all costs are included. The entry would be a book entry and a tax entry on the tax forms (type of tax form depends on the form of business). The costs would be funded from the business account. In this event, any personal use of the business vehicle would be considered income to the employee.


Did I miss any caveats?


Thanks, Michael

Newarcher (talk|edits) said:

8 February 2008
Never mind, I answered my own question.


Thanks,

Michael

TxSrv (talk|edits) said:

8 February 2008
Did you give yourself the correct answer? An S/E individual is not a distinct individual from the 1040 filer, nor is the Sch C "business" a separate entity in any real sense.

Newarcher (talk|edits) said:

8 February 2008
Right, I get that.


In order to match the expenses to the revenues, the Sole proprietor would calculate the business mileage std. or actual expenses based on the business mileage and then reimburse himself for the business use of his vehicle, coding the expense to vehicle mileage expense or vehicle expense. The expense would then flow through.


That's my take on it, do you not agree?


Thanks, Michael

TxSrv (talk|edits) said:

8 February 2008
S/E person can reimburse self anything desired. He can say this old thing was supposed to be a Lexus, so only $1 tendered for personal use. To get technical about optional mileage method for tax, from an accounting standpoint, that would not reflect true S/E net profit for an interested 3rd party like a lender. I don't imagine they fuss over that. In a divorce case, they might fuss, if the vehicle is an old compact costing a fraction of the mileage method for 1040.

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