S corp car expense deductions

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S corp car expense deductions

Postby markfaix » Fri Jan 25, 2013 7:06 pm

I bought a car in Nov 2012 and used it for ~50% business use for a partnership I was a member of. The partnership does not reimburse car expenses, so each partner writes off their own car expenses on their personal tax returns.

On 1/1/13, I left the partnership and started a single-member S corp. The S corp does reimburse shareholders' car expenses.

For 2012, I plan to use the actual expenses method to deduct my business car use on my 1040. I know that if I deduct actual car expenses method on my 2012 1040, I cannot deduct the standard mileage rate for subsequent years' 1040.

However, for 2013, is it permissible for me to get reimbursement from the S corp at the standard mileage rate?
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Re: S corp car expense deductions

Postby SGM » Fri Jan 25, 2013 8:32 pm

I am not an accountant, but I was never able to deduct car expenses while having an s corp. Does the s corp own the car? I had considered buying a heavier truck/suv when one could deduct the whole cost in 1 year if it was primarily for business use and had over 6K pounds towing capacity. I chose not to do so, because I basically drove old cars. I don't know if the larger vehicle deduction is still available.

Several years ago my accountant told me the s corp could pay for mileage, but then I would have to add that onto my 1040 as income. It was a wash, so I just stopped keeping track of mileage, and stopped wasting any energy on this issue.
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Re: S corp car expense deductions

Postby markfaix » Sat Jan 26, 2013 2:27 pm

@SGM:
I own the car as an individual.

Curious that your accountant said mileage reimbursement from an S corp is reportable as personal income. These sources suggest the mileage reimbursement for business use is only taxable to the extent that it exceeds the IRS standard rate:

http://smallbusiness.chron.com/auto-exp ... 37691.html
http://www.gedeonlawcpa.com/deduction-f ... rporation/
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Re: S corp car expense deductions

Postby hicabob » Sat Jan 26, 2013 4:52 pm

My S-corp owned a pickup truck that my biz-partner used to pick up parts which we depreciated - gas/maint was a corporate expense - I expensed my personal mileage at the IRS rate ( $.55/mile ) which was counted as a corp. expense.
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