Can I use Section 179 Deduction on a vehicle registered under my personal name?

[thejewelryplug]

I am a single member LLC being taxed as a S Corp.

I purchased a BMW X6 that qualifies for the Section 179 deduction since its over 6,000 gross LB.

I will be using the vehicle about 75% for business related purposes, 25% for personal.

I read on some forums that I could still take the Section 179 deduction but the correct way is to reimburse myself from my own company. May anyone help me clear this up? Is this correct? And if so, how would I reimburse myself? From my understanding, I will need an accountable plan. The car is being financed for a total amount of $22,000 after I put a $13,000 cash down payment.

Do I reimburse myself for my insurance cost as well?

Do I send myself a monthly reimbursement from my payroll? Or do I send it all at once? Any help would be greatly appreciated!

[DawnC]

A vehicle used for business may be owned by the corporation or by an employee (even a shareholder-employee). The method of claiming the deduction will differ depending on the ownership of the vehicle.

Vehicle owned by the employee

If the employee (or a shareholder-employee) uses their personal vehicle for business on behalf of the corporation,

• The employee can submit a request for reimbursement to the corporation.
• The corporation can then reimburse the employee based on the standard mileage rate.
• The corporation gets a deduction for vehicle expenses paid.
• The reimbursement is not reportable as taxable income to the employee.

For tax years prior to 2018, if the employee is not reimbursed for business travel expenses, the employee,

• Claims an unreimbursed employee business expense deduction as a miscellaneous itemized deduction on Schedule A of Form 1040.
• Can use the actual expenses or standard mileage method to calculate the deductible amount.

Beginning in 2018, unreimbursed employee expenses are no longer deductible.

Vehicle owned by the corporation

A corporation must determine the deduction for vehicles it owns based on actual operating expenses. The corporation is also limited by the business-use percentage of the vehicle.

The corporation can deduct all of the operating expenses of the vehicle without regard to the business-use percentage if the personal-use percentage is treated as income to the employee.

• This is typically the case when you get the use of a company car as an employee benefit.
• The corporation's deduction for the personal-use percentage is treated as a compensation expense.
• The employee's income for the personal use of a corporate vehicle is determined based on the market value of the vehicle, not on the actual or standard method used to determine the deduction of the cost to rent a vehicle, for example.

Business Use of Vehicles  - This link has more information on this topic and also has links to Section 179 and bonus depreciation methods as well as the tax implications of these different options.  

[thejewelryplug]

Thanks for your reply.

Am I allowed to depreciate the car with section 179 though? I was looking to reimburse myself for the actual expense of the vehicle instead of mileage. Is it possible to just reimburse myself $600 every month under an accountable plan to cover my insurance/gas/finance with interest fees?

I am only going to drive the car for less than 2000-3000 miles yearly. I do not think I would be saving any money doing the mileage deduction. If I cant use section 179, would it be best to lease the vehicle to my own company? That way myself(the lessor) can deduct things such as maintenance, depreciation cost, insurance etc?