Client's business operated as a Sole Proprietorship through 05/30/16, generating $260,000 in net profits.
On 05/31/16, TP formed an LLC electing S-Corp taxation and proceeded to operate the same business with the new structure, generating 2016 profits of ~$100K after his salary.
On 03/31/16, TP purchased a Tesla Model S. Purchase price: $120,375.
Between 03/31/16 and 05/30/16, TP drove this vehicle 90% for business purposes, for a total of 1938 business miles out of 2153 total miles ($1047 using SMR).
His actual expenses to operate the vehicle in that period totaled $2786, which includes the new vehicle registration and titling fees.
From 05/31/16 to 12/31/16, TP drove this vehicle 92% for business purposes, for a total of 6783 business miles out of 7109 total miles ($3663 using SMR).
His actual expenses to operate the vehicle in that period totaled $2409.
TP's S-Corp is designed to reimburse him for the business use of his vehicle, but is not specific as to whether this will be calculated using the standard mileage rate or actual expenses.
Questions:
1. Should TP claim the SMR or actual expenses on his Schedule C?
2. Should his reimbursement from the S-Corp be based on SMR or actual expenses?
3. Must his Sch C auto expense deduction method be the same as his S-Corp auto expense reimbursement method?
4. How to calculate depreciation if using actual expenses? How to split/assign/allocate depreciation for 2 months of use to his Sch C & 7 months of use to the S-Corp ?
Any help or guidance is sincerely appreciated.
Thanks.
On 05/31/16, TP formed an LLC electing S-Corp taxation and proceeded to operate the same business with the new structure, generating 2016 profits of ~$100K after his salary.
On 03/31/16, TP purchased a Tesla Model S. Purchase price: $120,375.
Between 03/31/16 and 05/30/16, TP drove this vehicle 90% for business purposes, for a total of 1938 business miles out of 2153 total miles ($1047 using SMR).
His actual expenses to operate the vehicle in that period totaled $2786, which includes the new vehicle registration and titling fees.
From 05/31/16 to 12/31/16, TP drove this vehicle 92% for business purposes, for a total of 6783 business miles out of 7109 total miles ($3663 using SMR).
His actual expenses to operate the vehicle in that period totaled $2409.
TP's S-Corp is designed to reimburse him for the business use of his vehicle, but is not specific as to whether this will be calculated using the standard mileage rate or actual expenses.
Questions:
1. Should TP claim the SMR or actual expenses on his Schedule C?
2. Should his reimbursement from the S-Corp be based on SMR or actual expenses?
3. Must his Sch C auto expense deduction method be the same as his S-Corp auto expense reimbursement method?
4. How to calculate depreciation if using actual expenses? How to split/assign/allocate depreciation for 2 months of use to his Sch C & 7 months of use to the S-Corp ?
Any help or guidance is sincerely appreciated.
Thanks.
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