My client is an S Corp. She owns a car and the title is in her personal name. Can she capitalize and depreciate the car in the S Corp and deduct actual expenses? I think she will need to sell the car to her corporation, including paying sales
Can an S Corp capitalize and deduct automobile expenses if the title is held personally by the owner?
Answers
I think you're on the right track. I'm I'm not a
I ran into the same issue recently. Your client can not expense 100% against the S Corp. The S Corp will need to create an 'auto lease expense' on the general ledger. Then your client will have to track her mileage usage to determine what is personal use versus business use. You might want to look at the MileIQ app on your iphone. It is a pretty simple way of tacking care of tracking those figures. You can expense only her business usage. You might want to allocate the other personal usage against a shareholder draw account if the company is cutting checks against the entire note as it is considered an income to her. The important thing is to make sure you have your mileage report (personal vs. business) on file in case those transactions are audited.
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Accounting