Expense for Company Vehicle?

[tacks]

Years ago a 'professional' had personal use of his corporation's vehicle. This professional has always been 100% owner of his Corp (which i've converted to an S Corp). Lets assume that back in the day the vehicle was used for business related to his corporation.

But now this fellow is semi retired. He is slowing down and does less. Hence he's not out promoting and using the vehicle for business like he used to. The vehicle does still belong to the Corp. But it does not appear that his corporation still needs the vehicle.

Can we deduct the insurance and repair bills related to this old vehicle? It sounds as though such bills are no longer buisiness expenses but personal ones. How do i go about accounting for this?


[I'm aware that personal use of a company vehicle must be reported as income on a w2. But unfortunately the market value of a leased a 89 mercury comes to 0. Thus i didn't show any of this 'employee benefit' income on his w2. Perhaps i ought to go back and file a corrected w2 showing a fringe benefit based on something other than market value of lease.)

[JG EA]

I would say that personal use % needs to be accounted for in some way. The correct way is to put into W-2 personal use as you said. But in the past I have gotten information long long after the year ended and the shareholders had plenty of payroll reducing their P&L into the negative range. They were unsure of how much the vehicle was used personally.

What I did was discuss their driving habits and we came up with a percentage, We did a Jounal Entry for Fuel, Insurance, and any other accounts that were affected and put them into distributions. Messy I know, But at least there was a good faith effort made to not take them as part of the P&L.

[tacks]

Thanks, JG. That's most helpful. Like yourself, I certainly could make some adjustments that would be seen as a good faith effort.

[veritas]

how about

Selling the car back to the shareholder. Insurance is often much higher on a company car.