S-Corp has three company vehicles - #1 solely used for business and all the time parked at the company site, #2 used by sales rep who also spends quite a bit of time in the office and running other errands, #3 used by employee/shareholder. #2 & #3 frequently run errands for the biz on there way to work and from work but not all the time. Remaining commuting miles are minimal, personal use of vehicles is prohibited by employee contract (#2 - 900, #3 - 1,500), both also have personal vehicles. As I see it they mainly drive these vehicles home for the convenience of the employer, could these commuting miles be treated as such in combination with being minimal, hence no inclusion in payroll?
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You have
W2 income for vehicle #2 It is minimal. Look at page 13-32 in TTB for commuting valuation rule.Originally posted by Gretel View Post
Also for #3 look at page 13-31 since the commuting option for employees is mot available for shareholder/employees -
Thanks, Veritas. My problem is not about the calculations and which rule to use in which circumstances. Maybe my OP is not clear? Still hope someone else offers an opinion.Comment
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I am sorry. Let me try again. Under the circumstances described with both of the employees having this company car mainly for the convenience of the employer, I thought I have a good argument to not worry about the small amount of commuting miles driven where no errands were included on the way home/from home - at least for the employee that is not a shareholder and the commuting miles left after taking out the trips were errands were done are 900, total miles about 22,000. I know that this does not follow the strict rules that the first trip someplace for business is considered commuting, but the "for the convenience of the employer" doctrine should apply. Still not sure I made myself clear.Comment
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I don't
See how you can ignore the rules. Every audit we have thy look at company cars and how they are handled. When the auditor sees the w2 inclusion they move on to other issues. The agents are often amazed. I think that sets a good tone for the rest of the audit.
$3.00 a day for commuting seems to me to be more than fair. How much would it cost for the employee to buy a car to commute to work?
As to the shareholder/employee, the inclusion probably is minimal.
So in my opinion do the inclusion and do your clients and yourself a favor.Last edited by veritas; 12-16-2012, 12:52 AM.Comment
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Thanks, Veritas for bearing with me. I agree with you. I don't intend to totally ignore the rules. The errands both of them run on their commuting trip are quite extensive and I feel that those days should be left oft for the convenience of the employer. The record keeping for this is quite burdensome. I advised them to keep a log for a period of time, to prove that this is what is happening. If I, as an employee for a company, had to run that many errands with my personal car, I would object using my car for so much business even with the mileage reimbursement. I feel it is only fair that they have company cars with minimal personal use. As I said before, both of them have personal vehicles, so the question of buying a car for commuting is a moot one.Comment
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My thinking
If I leave my home and do errands on the way to work, the trip from my home to the first stop is commuting.
Now if it was 1/10th of a mile to the first stop I suppose you could make the argument not to include the 1.50 in income for that trip.
As far as record keeping all we have is a worksheet showing beginning and ending odometer reading, commuting miles, other personal miles and the rest is business miles. That seems to satisfy the auditors.Last edited by veritas; 12-16-2012, 12:53 AM.Comment
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So they got free cars and are griping about keeping a log?! Tell them to keep a log.Comment
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