S Corp owner selling truck

[JBP]

A client is setting up a new S Corp as 100% owner. He wants to buy a used truck (at a discount) from his current employer as he leaves, then sell it to his S Corp at NADA value (pocketing the difference and taking more in depreciation).
I don't like the feel of this, but haven't yet found anything saying he can't.
Thoughts?

[kathyc2]

I'm not seeing where there would be benefit, as he would have a personal capital gain on the difference.

[TaxGuyBill]

I agree with Kathy, there really isn't any 'extra' benefit to doing it that way. It would still balance out.

If he were to sell the vehicle to an unrelated third party, he would still be "pocking the difference" between his discounted purchase price and the selling price. So selling it to the corporation doesn't have any benefit in that regards.

As Kathy pointed out, the taxpayer will owe capital gain (likely short term) for selling the vehicle. The 'extra' in depreciation by the corporation would offset that.

The end result is that there isn't really any advantange to doing it this way, rather than selling the discounted vehicle to a third party and the corporation buying a non-discounted vehicle from another third party.