Auto - Fringe Benefit

[peggysioux]

If S-Corp supplies vehicles to employees for work and also supplies a vehicle to shareholder who is employee, I know I need to apply the lease value rule for shareholder; but rather than include the total lease value to shareholder's W-2, how is it determined what portion of the lease value is a working condition benefit if vehicle is used 90% business and 10% personal? I read where you can include total lease value to W-2 and then shareholder would take a deduction on schedule A, but it seems it would be more beneficial if we could exclude the business portion from W-2. Thank you in advance for your expertise. (I hope I am asking my question clearly)

[OldJack]

Basically, the adding to W2 is the same for any employee that has the use of a company owned vehicle for personal use. In your question the corporation takes 100% business use depreciation and expenses of the vehicle on the 1120S. For a new vehicle, based on the cost basis of the vehicle (FMV), you look-up the "Annual Lease Value Table" in pub 15b and prorate the table amount by 10% for personal use to determine the amount to add to the employee W2 gross plus a cents per mile for gas if the company paid for gas on those personal miles (subject to all payroll taxes). For a used vehicle, the same is done except the FMV is determined as of the date the employee first receives the vehicle for personal use.

[peggysioux]

Thanks Old Jack!!!

Much appreciated.

Peg

[veritas]

And after four years

you may update the fmv for the annual lease value.