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    Auto in S-Corp

    Client is 100% shareholder in s-corp.The company purchased a truck and shareholder will use for personal 15% and 85% for business. Personal mileage will be added to their w2 as income.Clients wants to take mileage deduction.Would the s-corp report 85% business use or does it have to be 100% with the shareholder using with no personal use.

    #2
    Personal Use of Company vehicle

    A log must be maintained recording the mileage of personal usage. The company gets to deduct all expenses, however, the owner must include in his W-2 the inclusion amount based on the leased value of the vehicle.
    The entry will be a debit to officers salary for the inclusion amoun, credit payroll taxes
    payable, and credit car expense for the net amount.
    You cannot just say well it is used 15 % of the time for personal usage.

    Comment


      #3
      Auto Use

      I agree, a log MUST be kept.
      Jiggers, EA

      Comment


        #4
        We'll I have to disagree somewhat. A log should be kept but I've never had a problem with an audit where there was some auto fringe benefit on the W2 and no log. The last time the auditor was surprised to see it and commented on "how hardly anybody does that". On other audits we show them our worksheet which shows opening and ending odometer along with business/commute/other personal use. End of story.

        Comment


          #5
          Veritas-Question

          without some kind of log, how do you determine how much personal & commute miles
          are driven? Now, the commute miles could be considered business if the corporation required the car to be driven home instead of staying on the parking lot at the office.
          This would be to prevent any damage to vehicle and to prevent it from being stolen.
          This would be in the minutes of a corporate meeting.
          What if the client drove the vehicle on a 1200 mile vacation trip and then forgot to
          mention it to you? These are the problems I run into and why I want to see a log.

          Comment


            #6
            I figure it out on my own car each year by using opening and closing odometer readings. I know exactly how far work is from home and how many trips a year I make. I swag the other personal use and the balance is business.

            I have also kept a log for one month and since it is nearly the same each month multilplied times 12.

            For my clients we ask them to complete a worksheet each year. We use a fiscal year end in Oct. The reason for this is to give us plenty of time to make calculations and give to our payroll dept for inclusion and payment of tax. We go by what our clients give us and we tell them they should have a log to backup their deductions.

            Comment


              #7
              Veritas-Thanks for your response

              Your last sentence is it. "We tell our clients they should keep a log".
              This is what I also do. I do not require them to furnish me with that log, however,
              they can furnish me the totals. I also tell them of the consequences that could occur
              if their is an audit. Am not saying the mileage would be disallowed but it is that possibility.

              Comment


                #8
                Reality Check

                Show me a client that logs his mileage every time he gets into his vehicle and I'll eat your hat. I found out a long time ago that if a customer has to do this he would rather forego the deduction than to make his life that miserable.

                There are alternatives, however. A basketball coach knows how far every game that is not a "home" game and has his schedule. Also how many times after hours he has to drive back to school for practice. He knows by the calendar when practice starts and stops. He knows where his scrimmage games are. His clinics. etc. A farmer knows how far it is to town and how many times per week he has to go.

                Failure to log does not constitute disallowance, but there should be some reasonable way to construct annual mileage. Better ways than pulling an unsubstantiated percentage out of the air...

                Comment


                  #9
                  Mileage-Audit

                  Had an audit a few years ago. The auditor was questioning the mileage and car expense.
                  Asked if I could prove it. Fortunately the client had an appointment book with all
                  appointments listed, dates, everything. Asked him to construct a mileage book from
                  that and he did. Everything was ok then.

                  Comment


                    #10
                    Say Snag

                    it is good to hear from you again. Notice your name just above guest is now
                    Snaggletoof. A client didn't get made at you and knock some of your teeth out
                    did they?

                    Comment


                      #11
                      I long for the old days when our clients wrote off all their cars, trucks, boats, planes, snowmobiles....

                      Comment


                        #12
                        Bird Legs

                        Yes, I post from two different computers, and the message board security system couldn't handle the same name from two different computers. Tried but too many hoops to roll through with the croquet ball and I gave up posting from the other computer.

                        So when posting from my daytime computer, I am "unregistered" with a name of Snaggletoof. Same ol' me.

                        Comment


                          #13
                          Ahhh.. those were the good old days. Blame the d-a-m-n computers for all this detail being required.

                          Comment


                            #14
                            Mileage %

                            Originally posted by Bird Legs
                            A log must be maintained recording the mileage of personal usage. The company gets to deduct all expenses, however, the owner must include in his W-2 the inclusion amount based on the leased value of the vehicle.
                            The entry will be a debit to officers salary for the inclusion amoun, credit payroll taxes
                            payable, and credit car expense for the net amount.
                            You cannot just say well it is used 15 % of the time for personal usage.
                            The 15% is frome home to office every day and the 15% was arrived by keeping the mileage for a month and the % came to 15 & 85. How would you determine the leased value of the vehicle to include in the w2.

                            Comment


                              #15
                              Originally posted by Unregistered
                              The 15% is frome home to office every day and the 15% was arrived by keeping the mileage for a month and the % came to 15 & 85. How would you determine the leased value of the vehicle to include in the w2.
                              IRS Publication 15-B, "Employers Tax Guide to Fringe Benefits", page 20, "Annual Lease Value Table". http://www.irs.gov/pub/irs-pdf/p15b.pdf

                              Comment

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