Schedule C Expenses For Vehicle Not Owned or Leased

[TaxNC]

A newly formed LLC (sole proprietorship) is in operation for the last three months of the year after the prior owner of the business
passed away. Several business vehicles are being used by the LLC (not yet owned and not leased) and expenses (fuel, insurance, etc.)
are being paid. Is it okay to detail the expenses in the Other Expenses Section of Schedule C filed for the LLC? Thank you.

[spanel]

More questions than answers... How did the current owner acquire the prior assets?? How does he not yet own them and operate them under an LLC?? How would he pay insurance on a vehicle not his?

Chris

[TaxNC]

Thanks for the reply. Here is more info. A verbal agreement was made with the new LLC owner (former employee) by the corporation with the deceased registered agent that the new LLC would totally run
the business for a designated amount of time, using all assets, claiming all income, and paying all expenses. Assets would be transferred to the LLC at a future date.

[spanel]

I'm not following who the New owner made such agreement with. One would expect a lease payment monthly for use of all equipment, then deduct fuel/insurance/etc where you would normally put it.

Chris

[TaxNC]

I appreciate rhe responses. The agreement is with the corporation's registered agent/owner. This arrangement is temporary while the legal stuff is proceeding. Yes, it is not a "regular" situation.
I assume the LLC is temporary and sometime this year, the corporation will have the LLC 's owner as its registered agent/owner.

[ATSMAN]

Is any of this agreement between LLC and agents/rep of the deceased owner written? I would not prepare a tax return with my signature unless I saw what was in a legally binding agreement.

At best the LLC is using the vehicles owned by another entity free of charge (highly unusual).

[TaxNC]

No, the agreement is completely verbal with the LLC claiming all income and deducting all expenses, including everything pertaining to the small trucks. The LLC owner has been friends with the
current registered agent of the corporation as well as the prior agent who passed away in 2021. I was informed that there will be no money paid when the LLC owner becomes the corporation agent. I
mistakenly wrote earlier that the assets would be transferred to the LLC.