Would you depreciate this?

[JoshinNC]

MMLLC Member purchases truck (+6000 lbs) for use solely by LLC but obtains loan in personal name and registers in personal name to obtain lower interest rate and insurance costs. Initially I told client we could not 179 expense the truck through the LLC because LLC doesn't "own" the truck but am thinking I may be being "too technical".

Opinions? Cites to support opinions?

[Gretel]

MMLLC Member purchases truck (+6000 lbs) for use solely by LLC but obtains loan in personal name and registers in personal name to obtain lower interest rate and insurance costs. Initially I told client we could not 179 expense the truck through the LLC because LLC doesn't "own" the truck but am thinking I may be being "too technical".

Opinions? Cites to support opinions?

No cites, but LLC cannot depreciate what it doesn't own and also didn't pay for? Only way out of this I see is to draft a capital lease that is treated like a sale to partnership. Otherwise just a normal lease agreement to cover all payments and take depreciation on 1040. Also keep in mind that all of this needs to be part of the Operating Agreement.

I really don't understand the insurance issue. Does insurance company know that vehicle is used 100% for biz? Otherwise he will be in trouble in case of damage and this is what insurance is for, right?

Sorry, you didn't asked for this.

[oceanlovin'ea]

people don't think

People just don't think or don't ask questions of the right people BEFORE doing these things.

Could it be written into the partnership bylaws or whatever they might be called that the LLC agrees to make the payments and pay all expenses on the vehicle as if it were owned by LLC? I don't know the technical rules for these things.

Beanna Whitlock is an expert on LLC's. She could probably give you some good advice. You can find her at NCPEfellowship.com

Linda, EA

[S T]

Insurance

I think Insurance on this vehicle could be an issue in a future time frame, if ever involved in any type of accident.

I would probably advise my t/p to check with their insurance agent!

Sandy

[JoshinNC]

In fact he did ask

People just don't think or don't ask questions of the right people BEFORE doing these things.

Could it be written into the partnership bylaws or whatever they might be called that the LLC agrees to make the payments and pay all expenses on the vehicle as if it were owned by LLC? I don't know the technical rules for these things.

Beanna Whitlock is an expert on LLC's. She could probably give you some good advice. You can find her at NCPEfellowship.com

Linda, EA

and I have the email I sent him where I stressed to register the vehicle in the LLC name, regardless of how the loan was structured. He didn't do it and said, "well I figured I could just lease it back to the company." I said, "sure you can, but you just lost the Sec. 179 deduction that we had based all your estimates on so you tax bill just went up $5000, congrats!".

Anyone ever run into this before and found a work around?

[kthurman]

Leasing truck

and I have the email I sent him where I stressed to register the vehicle in the LLC name, regardless of how the loan was structured. He didn't do it and said, "well I figured I could just lease it back to the company." I said, "sure you can, but you just lost the Sec. 179 deduction that we had based all your estimates on so you tax bill just went up $5000, congrats!".

Anyone ever run into this before and found a work around?

The leasing activity (Schedule C) would be able to depreciate the asset same as the LLC, right? One way or another the Taxpayer gets to the same place I would think.

[JoshinNC]

Except for the lease income to the Sch C, but yes

The leasing activity (Schedule C) would be able to depreciate the asset same as the LLC, right? One way or another the Taxpayer gets to the same place I would think.

I believe it gets him to where he wants to be. Uglier than purchasing it outright, but successful in meeting his desires.