sub-s corp 2004 tax question.


D

DecafCoffeeDrinker

Can someone please help me.

I run a one man software consulting company as my job. When I started 15
years ago I created a sub-s corporation. I have been filing taxes that way
ever since.

I heard an advertisement about small business owners buying a company car.

Can I do this? How does it work? What savings so I get by doing this?

Obviously I will also use the car for some personal use. Is there a
percentage of use I have to worry about?

For a situation like mine, is this a good idea?
 
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P

Paul A Thomas

DecafCoffeeDrinker said:
I run a one man software consulting company as my job. When I started 15
years ago I created a sub-s corporation. I have been filing taxes that way
ever since.

I heard an advertisement about small business owners buying a company car.
You mean the Company buys the car.

Can I do this?
Tell the dealership to title the vehicle in the company name, write a
company check, or obtain financing in the company name. Have it insured as
a business auto on the company insurance policy, etc and so on.

How does it work? What savings so I get by doing this?
Savings? It actually can go either way, depending on facts and
circumstances.
If the company owns the vehicle, they can depreciate it over 5 years (longer
if luxury vehicle limits apply), and deduct all the operating expenses
(fuel, oil, repairs, maintenance, insurance, etc). You would have to include
in your income, some amount for personal use.

If ~you~ owned the car, and had the company reimburse you for your business
miles at the standard mileage rate, you may come out ahead of teh game if
reimbursements exceed your actual operating costs. This happens when the
vehicle operating costs are less than the standard mileage rate.

Obviously I will also use the car for some personal use. Is there a
percentage of use I have to worry about?
Yup. Some amount will have to be a disallowed expense, in effect becoming
income to you.

For a situation like mine, is this a good idea?

Geez, that's so hard to tell without knowing tons more about you and your
business.
 
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D

DecafCoffeeDrinker

Thank you sir.



Paul A Thomas said:
car.

You mean the Company buys the car.



Tell the dealership to title the vehicle in the company name, write a
company check, or obtain financing in the company name. Have it insured as
a business auto on the company insurance policy, etc and so on.



Savings? It actually can go either way, depending on facts and
circumstances.
If the company owns the vehicle, they can depreciate it over 5 years (longer
if luxury vehicle limits apply), and deduct all the operating expenses
(fuel, oil, repairs, maintenance, insurance, etc). You would have to include
in your income, some amount for personal use.

If ~you~ owned the car, and had the company reimburse you for your business
miles at the standard mileage rate, you may come out ahead of teh game if
reimbursements exceed your actual operating costs. This happens when the
vehicle operating costs are less than the standard mileage rate.



Yup. Some amount will have to be a disallowed expense, in effect becoming
income to you.




Geez, that's so hard to tell without knowing tons more about you and your
business.


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