S-Corp, Auto Lease

[Gretel]

I am bringing up this response from an older thread:

The way we handle it in our firm is to:
1-Be sure we advise the s-corp to have a written auto lease in place spelling out exactly what the corp is to pay for (a set lease payment per month, which usually ties to the car payment, insurance, fuel, maintenance, etc)

2- Corporate minutes to approve the lease

3 - have the monthly lease payments paid to the shareholder rather than the finance company directly

4 - The s-corp issues a 1099-MISC to the shareholder showing the monthly lease payments in box 1-rent

5- Include the monthly payments in the shareholder's individual F-1040

This usually discourages them from continuing the practice of paying personal car payments out of the s-corp.

Now I would like your brains for one simple question, assuming we deal with a legitimate auto lease. Where would you report this on the 1040. I would like to report on L.21 but think it needs to go on Schedule C.

[WhiteOleander]

I think it would go to line 21. Sch C is for renting of personal property when it is conducted for profit. Since this is only the t/p's personal vehicle, it would not be rented for profit and not subject to SE.

[veritas]

Don't forget

to include the personal use on their W2.

[ChEAr$]

I think it would go to line 21. Sch C is for renting of personal property when it is conducted for profit. Since this is only the t/p's personal vehicle, it would not be rented for profit and not subject to SE.

And an automobile is not personal property?

[Gretel]

T/P has 2 legitimate leases, no personal use.

Somewhere I read (didn't keep) if you lease property to your biz where you materially participate in, then you have biz income. That this is regular and continuous is a given fact. If he indeed makes a profit I still think it is supposed to go on Sch. C otherwise it's a moot point anyway.

[WhiteOleander]

And an automobile is not personal property?

I guess I didn't phrase that properly. The auto is of course personal property. I was making the point that since it was his own car and he isn't in the business of leasing/renting cars, it would not go to Sch C.

But, Gretel may be correct in her latest post.

[WhiteOleander]

Gretel,
I did find this posted. Not sure if it will help.

http://www.taxalmanac.org/index.php/Discussion:Vehicle_not_owned_by_S_Corp

[Gretel]

White Oleander,

Thanks for posting this link. It's supports my position. I don't like it but that is another story.