S Corp Shareholder Vehicle

[KBTS]

I have searched the board and read all the threads I could find on this topic, but I could not find this exact situation.

Client is a 50% shareholder of S Corp and is on payroll as employee. The corporation uses his personal truck for company business. In fact, he uses another vehicle for personal use and the truck stays at the business location. The corporation reimburses him only for the gas used in the truck. I suggested the best solution would be to have corporation reimburse him under an accountable plan for mileage put on vehicle, but the other shareholder kind of calls the shots in the business and is not agreeable to this.

So client wants to know, can he deduct vehicle costs on his personal return on Form 2106? If so, would he have to use actual expenses and reduce by the amount of gas reimbursement or could he take the standard mileage rate and reduce that by the gas payments?

Thanks for your help.

[JohnH]

Chances are the 2% haircut would wipe out the benefit of the 2106 - it definitely will wipe out a significant part of it. Seems like the other shareholder is being a bit moronic about this. After all, gas only comprises a small part of the cost of operating a vehicle.

Anyhow, one solution might be to drop his salary by an amount that approximates the difference and start using an accountable plan. That would have the effect of providing him with some tax-advantaged income and saving the corp some payroll taxes in the bargain.

[Gretel]

If you are stuck with the 2106 for the other vehicle expenses you can use SMR and deduct the reimbursed gas from the total. At least I haven't found anything to the contrary.

[KBTS]

Thanks for the suggestions. I could not find anything that says he could not use SMR either, so I will contact him. I'm pretty sure the company keeps track of mileage because they add a mileage charge to all their invoices. He may not have enough to itemize anyway, but at least I tried.