Car expenses

[KWF]

An S corporation provides a car (full time, 24/7) to one of its employees to be used for carrying out his employee duties as a traveling salesperson. Corporation pays all car expenses except gas, which the employee provides. Besides business use, the employee also uses the car for occasional personal use. The value of the personal use is included on the employee's W-2 as wages.

Does the corporation get a deduction for both the personal use amount included on employee's W2 (as wages), as well as 100% of expenses (except for employee provided gas) related to the car. (as auto expense)?

[Wiles]

Debits & Credits

What is the journal entry that the corporation posts to record the personal use that is added to the employees W-2?

[Burke]

No, the corp does not get to deduct both. Since the corp should be deducting the cost of the vehicle (either lease costs or depreciation) and all the expenses it is paying for, it does not make sense to deduct the personal use imputed on the employee's W-2 as well. That would be deducting it twice.

[DMICPA]

Personal use of Corporate Car

Employee uses the Employer Provided Vehicle Worksheet to compute the personal use portion which amount goes on the W-2 in Box 1 and SS and Medicare. This value is based on the Annual Lease Valuation tables, the personal verses total miles driven and gasoline at 5.5 cents per mile.

There is no Journal entry on the books for this.

The 1120-S instructions say "do not deduct as wages the amount allocated for personal use of a car.

As an election, the amount to be includable in the wages can be either calendar year or November of each year so the amount can be calculated and entered in the payroll.