Auto Expenses

[Florida_EA]

Client started new business (S corp) and contributed auto that was used 100% for business. Client wants to use the mileage method. Can client show the auto on the balance sheet based on the FMV when it was contributed and not depreciate it?

[Uncle Sam]

In whose name is the automobile - S Corp's or owners?
How does the insurance policy titled - S Corp's or owner's?

You need to determine that before you can consider even booking at FMV the vehicle.

If the incidents of ownership are still the owner's, then you may consider picking up the business mileage on Form 2106.

[TaxGuyBill]

Client wants to use the mileage method.

I don't think that can be done. I don't think Corporations can use the Standard Mileage Rate for their own vehicles.


The term "standard mileage rate" means the applicable amount provided by the Service for optional use by employees or self-employed individuals in computing the deductible costs of operating automobiles (including vans, pickups, or panel trucks) they own or lease for business purposes, or by taxpayers in computing the deductible costs of operating automobiles for charitable, medical, or moving expense purposes.

https://www.irs.gov/pub/irs-drop/rp-08-72.pdf#page=6

Although the newer Revenue Procedures do not using this wording anymore, I have read that the rule has not changed.

[Florida_EA]

In whose name is the automobile - S Corp's or owners?
How does the insurance policy titled - S Corp's or owner's?

You need to determine that before you can consider even booking at FMV the vehicle.

If the incidents of ownership are still the owner's, then you may consider picking up the business mileage on Form 2106.

The car is owned by the office and only shareholder of the S Corporation. Everything is in the owner's name including insurance policy.

[Anarchrist]

The car is owned by the office and only shareholder of the S Corporation. Everything is in the owner's name including insurance policy.

So then he didn't contribute the auto to the business.

[Rapid Robert]

I don't think that can be done. I don't think Corporations can use the Standard Mileage Rate for their own vehicles.

Somewhere in TheTaxBook there is a comment to same effect -- corps can't use standard mileage.

Anyway, even if they could, there is a depreciation component to the standard mileage, so it would still be depreciated.

As for whether the corp can even treat the car as a 100% business use asset, there are arguments that the vehicle can be treated as equitably owned by the corp if it is consistently treated that way. It's a position to take, I have at least one S-corp client who has done just that.

A far more simple solution is to just have the corp reimburse the owner/employee for mileage under an accountable plan, then there is no depreciation to track on the tax return and no tax impact to the owner, but the corp still gets the deduction (as employee expense reimbursement).

[DonB]

A little off topic

Client started new business (S corp) and contributed auto that was used 100% for business. Client wants to use the mileage method. Can client show the auto on the balance sheet based on the FMV when it was contributed and not depreciate it?

Can you tell me which part of the automobile registration cost is a Schedule A deduction and how it is designated on the receipt?

[JON]

Florida

Can you tell me which part of the automobile registration cost is a Schedule A deduction and how it is designated on the receipt?

As I remember FLA's license plates have nothing to do with the value of the car and that is what is deductible as a tax on Schedule A.

[DonB]

I have a new FL client, and have asked for copy of automobile tax bill for personal tax deduction on Schedule A of Form 1040.

Did I miss something? I thought the only "taxes" that one could deduct (real or personal) must be of the ad valorem type.

While I'm here: What kind of "sales tax" rate does FL toss out for a new car purchase?

FE

For my FL client, the sales tax rate is 7% as per http://salestax.avalara.com/. I have three vehicle registration receipts form him and of the three $amounts, only one is changing with the age of the vehicle. That one is "Reg Tax". the "Init Reg" remains the same on all three at $225. Oldest one is a 2000 @- $88, next is 2009@- $108, and last is 2015@- $114.