S Corp

[S T]

Have a S Corp that the has 2 shareholders which are husband and wife, and S Corp is the General Partner of a LP. Shareholders issued checks for auto loan payments from the S Corp but issued auto reimbursments of actual expenses from the LP. How to show the auto loan payments from S Corp? No accountable plan, auto is in shareholder's name.

No wages issued to either shareholder through S Corp, spouse received wages from LP. LP shows a loss, which flows through to S Corp. There are additional shareholder loans to S Corp to increase basis.


Sandy

PS I am thinking that most small business owners should not be S Corps or LLC as they can not separate themselves and think of themselves as an employee. They still believe that the S Corp assets are there own personal assets. I need a "sad" smilie!

[lsmith]

Auto payments

I would have a lease agreement from sh to the corp and a copy placed in the minutes of the corp.
This would legalize the payments for the auto and the deduction of payments by the corp. This would also allow deduction on the personal side of income/expense for lease.

[OldJack]

This is case is probably not as big a problem as it sounds.

1. S-corp auto loan payments- Loan payments could be considered as cash/property distributions to the shareholders or payments reducing the loan owed by the S-corp to the shareholders. There is no rule keeping an S-corp from making a payment for an employee or shareholder as long as it is not claimed as an S-corp tax deductible expense.

2. LP auto expense reimbursements- writing a check for actual expenses properly documented is considered an accountable plan. If the auto expense is proper for the LP then there is no reason why the LP should not reimburse the person that incurred the expense.

3. S-corp wages- It would appear that the shareholders must loan money to the S-corp in order to take losses, therefore I would assume there is no profits to pay wages. If there are no profits for wages the S-corp is not required to pay officer/shareholder wages even if taking cash distributions.