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  • Business car questions

    I have a single member S-corp and wondering if it even makes sense to buy our next car in the business to help reduce the tax bill.

    1) Can the car be titled in my name, my wife's name and the business name?
    2) Can we get personal car insurance and write off the business use of the car? For example - 80% business 20% personal
    3) Is driving to and from the business office counted as personal miles or business miles when calculating the business vs. personal use of the car?

  • #2
    Will let others provide smarter, more detailed, and more helpful answers.

    I just wanted to say: Good luck with this (since it is highly unlikely to work out the way you probably want it to).

    Also, welcome!

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    • #3
      We own a business. We use our vehicle for work, but not 100%. Our accountant advised purchasing and titling the vehicle as a personal vehicle, and then tracking mileage for business vs personal use. The business reimburses us 100% of the vehicle expenses, but we declare the non-business portion of this reimbursement as income, based on the mileage apportionment.

      It is my understanding that it is more expensive to insure the vehicle if it is titled under the business, rather than as a personal vehicle.

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      • #4
        My understanding on this topic is that traveling to and from your primary place of business within the same general area that you live is not considered business mileage. However, if your employer, LLC, S corp, requires you to travel to additional locations (such as a satellite office) then you can use the mileage difference between your primary location and the additional location as business mileage. Obviously, if you are driving the car to a work function that is outside of the normal location of your job (CME meeting or something) that could also be considered a work expense.

        I will follow to see if I misunderstand this...

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        • #5
          Commuting miles are personal not business. If you are only driving from home to business and back then you have no business miles. If after you get to the office you then drive to other business locations during the day, those are business miles.

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          • #6
            I find no fault with the above advice. Unfortunately, this is a much misunderstood non tax loophole and many tax preparers exploit it so they will look like heroes. Makes it hard on those of us who have ethics.
            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              Originally posted by v1nce View Post
              I have a single member S-corp and wondering if it even makes sense to buy our next car in the business to help reduce the tax bill.

              1) Can the car be titled in my name, my wife's name and the business name?
              To get all the depreciation of car onto your 1120S tax return, I think S corp (i.e., LLC) needs to be owner of car.

              2) Can we get personal car insurance and write off the business use of the car? For example - 80% business 20% personal
              I wouldn't think an IRS agent would care but seems like the insurance company might. FYI I kinda think they'll charge you quite a bit more for a commercial vehicle insurance policy. Out here, at least, that incremental insurance cost eats up a lot of the savings.

              3) Is driving to and from the business office counted as personal miles or business miles when calculating the business vs. personal use of the car?
              Commuting miles aren't deductible.

              BTW I buy expensive cars. It's my one financial vice. And I'm a tax accountant so I could go to the work of dropping big deductions on a tax return. But it never seems worth it to me. If you follow the rules--even if you get a big deduction--it's way too much work.
              Stephen L. Nelson, CPA, MS-tax, MBA-finance - Partner
              Nelson CPA PLLC | s[email protected]

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