Self Rental and Reasonable Lease Amount

[equinecpa]

I'm meeting with most of my S-corporation clients this month to make sure they have leases between themselves and their businesses for real estate and vehicles. When determining what figure to use for the lease do you strive for a FMV rate? Is a FMV required? Is their anything wrong with just leasing the property for the deductions taken on the personal return related to that property eg. mortgage int, depn and property taxes so that the taxpayer breaks even on Schedule E?

The way I see it the K-1 income and the Schedule E income all end up on the same line so is the lease amount critical?

[Davc]

FMV is important for several reasons. It can enter into the reasonable wage determination and also aids in separation of liability.

[equinecpa]

I have a client that transferred most of their assets into their LLC electing as an S-corp but due to loans/titling issues a couple of items were not transferred. Depreciation and interest on these pieces of equipment would amount to about $15,000 a year for the next two or three years.

What's the best way for her to still claim the interest and depreciation on these assets? Should she lease them to the LLC ( if so would just enough to cover the depreciation /interest be all right)? Is there some kind of document she could use to give the LLC equitable title and therefore the right to claim these expenses?

Just crossing i's and t's....

Carolyn