Discussion:S-Corp Vehicle - Is it legal?
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| Revision as of 18:49, 23 October 2009 EasternPA (Talk | contribs) (Fsteincpa, I cra) ← Previous diff |
Revision as of 19:12, 23 October 2009 KatieJ (Talk | contribs) (Moon, I think yo) Next diff → |
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| {{ForumReplyPost|UserID=EasternPA|Date=23 October 2009|Text=Fsteincpa, I cracked up reading it too. I could not believe any one would go to USTC with no receipts for 95% of the claimed deductions. The summary captured the bubble gum popping nature of the interaction.}} | {{ForumReplyPost|UserID=EasternPA|Date=23 October 2009|Text=Fsteincpa, I cracked up reading it too. I could not believe any one would go to USTC with no receipts for 95% of the claimed deductions. The summary captured the bubble gum popping nature of the interaction.}} | ||
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| + | {{ForumReplyPost|UserID=KatieJ|Date=23 October 2009|Text=Moon, I think you meant to implement your plan, not implicate it. A thesaurus might be a good investment <G>.}} | ||
Revision as of 19:12, 23 October 2009
Discussion Forum Index --> Basic Tax Questions --> S-Corp Vehicle - Is it legal?
Discussion Forum Index --> Tax Questions --> S-Corp Vehicle - Is it legal?
| 23 October 2009 | |
| I just want to see if this is the best way to deal with this subject. I know it’s been touched on numerous times in tax almanac, but this to me seems like the most tax advantage way. My true question is…is this legal?
Situation: S-Corp has one shareholder. No vehicles are on the books as an asset. The shareholder and entity draw up a contract that states that the shareholder will be reimbursed 55 cents per mile on usage of the vehicle for traveling to and from different work related activities. No commuting involved. The shareholder keeps a log of the mileage. Let’ say the shareholder drives 1,000 miles for the year and is given a check for 550$. The corp deducts this as equipment rental. The shareholder completes his 1040 and puts $550 on schedule C as income. The shareholder also deducts $550 as a vehicle expense. That way it equals out to $0 in income on Schedule C. Is this legal? | |
| 23 October 2009 | |
| To the extent the mileage reimbursement does not exceed the federal per mile rate, I believe it should be auto expense to the S Corp since it is based on an accountable plan for mileage. No 1099, no Schedule C entries. Payments in excess of the federal per mile rate probably are wages.
A car allowance that is not an accountable plan with a log submitted into the corporate records is also wages. No 1099, no Schedule C entries. | |
| October 23, 2009 | |
| Yeah, you're over-complicating it. Just a mileage reimbursement, plain and simple. Book to mileage expense or something like that and be done with it. Done done. | |
| 23 October 2009 | |
| A. I'd not use 55cents in the language agreement, but say the "federal per mile rate". I'm not sure it needs to be even stipulated since this falls under the province of a normal employee/employer relationship.
B. I would not deduct it as "rental" but "mileage" expense. C. Commuting mileage to place of employment is not deductible. D. Make sure he keeps good business records of mileage and business purpose. What not to do: http://www.ustaxcourt.gov/InOpHistoric/Osorio.SUM.WPD.pdf | |
Death&Taxes (talk|edits) said: | 23 October 2009 |
| And I think the agreement should be between the employee and the entity, not the shareholder. You make it sound like s/he is not taking a wage. | |
| 23 October 2009 | |
| Well I was planning on implicating this plan with my S-Corp clients so they wouldn’t have to put the vehicle on the books. Some of the S-corp clients are not taking wages yet (start up) and some will. Thanx for all the advice. | |
| 23 October 2009 | |
| Eastern, that was good reading actually. Chuckled completely and will use it as a handout to clients when the topic arises. | |
| October 23, 2009 | |
| Moon, none of this has anything to do with wages. And they don't have to put the vehicle on the books if you do this. Again, don't make it harder than it is. It's just mileage reimburse. Don't over think it. | |
| 23 October 2009 | |
| Fsteincpa, I cracked up reading it too. I could not believe any one would go to USTC with no receipts for 95% of the claimed deductions. The summary captured the bubble gum popping nature of the interaction. | |
| 23 October 2009 | |
| Moon, I think you meant to implement your plan, not implicate it. A thesaurus might be a good investment <G>. | |
