Corporate moving expenses

[equinecpa]

Moving expenses:

I have a client who has an S-corp. She moved from CA to TX in 06. New client for me in 2007.

She claimed all sorts of moving expenses including household rent in 2006 and 2007 in her S-corp. I'm raising an eyebrow at this. I'm not sure but I think she had a personal lease which she couldn't break in CA and is deducting this in the S corp perhaps as an employee benefit?

The corp is not profitable. Does not have employees (no w-2 to herself). Can you see any circumstance where this would be deductible? I've seen major corporations reimburse employees for all sorts of costs related to moving but I"m not sure that this is allowable here being that she is the major shareholder and not officially an employee. Which leads me to another question...if she were an employee would they be deductible if she moved for the corporations benefit?

Auto expenses:

Same client has a vehicle in the corporation. In communiction I find she uses it approx 40% for personal use. She hasn't W2'd herself the benefit...what can I do with this? Can she reimburse the corporation for personal use of the business vehicle perhaps at standard mileage rates?

Thoughts?

Carolyn

[veritas]

Best to

prepare a W2 and include the auto fringe benefit. She could have reimbursed he corp at the standard mileage rate.

Secondly, no way on the personal moving expenses. Even if the corporation had adopted a plan for moving expense reimbursement it is not permitted for a 2% shareholder.


Is this another Turbo Tax project?

[equinecpa]

Believe it or not no...she paid a professional good dollars last year for tax prep and pays a bookkeeping firm about $500.00 a month to keep books. I'm gonna give her a heads up on that too - find someone a little more knowledgeable (to give other preparers credit it is possible she chose not to listen to advice...)