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Discussion Forum Index --> Advanced Tax Questions --> Trucking business- 1099misc for the owner of S Corporation
Discussion Forum Index --> Tax Questions --> Trucking business- 1099misc for the owner of S Corporation
Rfod (talk|edits) said:
| 7 November 2007
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| I have a new client in trucking business. It's an S Corp. and two owners have some trucks registered under their own name. These trucks used in business and in return owners would receive weekly distributions out of their S Corp. These distributions or payments always were reported on 1099 misc for each owner by their previous accountant.As a result, they been filing schedule C with their personal return.I have my concerns whether shareholders should be receiving 1099 misc at all .But, their previous accountant argues that in this particular situation it is correct. Is previous accountant right? Is there anything special about trucking business?
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TheTinCook (talk|edits) said:
| 7 November 2007
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| They could be for the rental of the rigs to the S-Corp. There still needs to be salary and all that other jazz. Is he 1099ing all the money out of the S-Corp?
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Rfod (talk|edits) said:
| 8 November 2007
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| Are you sure? Because the corporation itself owns at least 50 other trucks and 1099 misc. shows it in box 7. As far as salary, yes they are on the payroll and getting w-2's as well.
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Meyerbooya (talk|edits) said:
| 8 November 2007
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| Okay - so if I am reading this right. The S-Corp has 50 trucks that are owned solely by the business and then the shareholders also have trucks that are owned by themselves personally? And they are using these trucks for the S-corp business? And you are wondering if it is correct to give the shareholders 1099s for: income generated for the use of just these trucks? Is this right? (I don't know, maybe it is late and I am just not comprehending your question correctly.)
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Rfod (talk|edits) said:
| 8 November 2007
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| You are reading this right Meyerbooya.
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CrowJD (talk|edits) said:
| 8 November 2007
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| The root of this whole issue is that they did not want to insure the trucks under the business name to save on premium? Maybe there's something with the insurer about going over 50 OTR (i.e. drastic premium increase). There have been discussions on this issue re: passenger cars, lite trucks, but I can't remember the search words to get you started. Perhaps someone can steer you to the post. Can these trucks also be used for personal driving? Are we talking C-150s or Macks here? One point to be made is that I don't think they are out of the woods on the insurance issue (though they may think they are). If they are essentially renting trucks to the business (equipment lease)[see IRS pub.925, Passive Activity Loss Limitations], filing sched. C, taking depreciation, paying SE tax, that is also a business, and that premium is being wasted cuz I don't think an insurer is gonna pay a claim, it's still business use, for hire no less. More facts on the trucks if you don't mind.
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CrowJD (talk|edits) said:
| 8 November 2007
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| Try this search, there are others "Discussion: Bus. owner lease auto to business" You will see at the top an "Article Title Match" look at that article.
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Aunt Emmy (talk|edits) said:
| 8 November 2007
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| Shareholders might be driving their own trucks as owner operators. Why dont you just ask the client or the previous accountant for details on their setup and figure it out from there?
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Rfod (talk|edits) said:
| 8 November 2007
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| Aunt Emmy, supposedly shareholders are driving their own trucks within their own trucking corporation.Shouldn't they be rather paid as employees(w-2) in this case, as oppose to owner operators(contractors)? The mere fact that they own these trucks under their own names, does it make them schedule C filers? I guess, my question is what makes them self employeed in this case?
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Death&Taxes (talk|edits) said:
| 8 November 2007
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| Are there other employees? Could this be a way around covering people for health insurance, pension etc....flow income to them as owner/operators and deduct the health insurance there, plus have a retirement plan there? I have seen this done before, but not in trucking.
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JR1 (talk|edits) said:
| November 8, 2007
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| Is it on purpose, or is this just accidental/whacked client stuff, where sometimes they own the trucks personally and sometimes in the corp, but all are treated as if in the corp? That's the first question to me.
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