Personal vehicles used for Husband/Wife LLC Partnership as well as personal mileage

[ART05]

2022 Tax Year.  Husband/wife have small LLC Partnership business selling to retailers, and direct customer sales via trade shows and requests.  We have 5 vehicles, 2 or 3 are used about 10% of annual miles for business travel.  It's beyond me to keep track of every vehicle cost item, I do a lot myself, we pay cash for the vehicles, most have lifetime registration fee and of course 1 insurance bill.  I know the exact business and annual miles used by each vehicle.  I would like to say the owner of a car (husband's or wife's) contributed the value of the IRS mileage for business miles and the business "didn't get the cash value" because it was spent/expensed to use the vehicle.  So for 200 miles of the husband's car driven to trade show, the husband contributed $0.585*200=$117 to his % ownership of business and the business had $117 of vehicle expense.  Each car and owner gets treated similarly.  I'm not trying to be clever, actual annual vehicle costs mean little compared to average annual lifetime operating cost.

[PatriciaV]

Please clarify the question you are asking. Do you need to know how to report business vehicle mileage in TurboTax?

[ART05]

TT Business does not allow business mileage to be entered. It does not allow vehicles to be added or removed. It says only actual vehicle expenses can be entered. It has done this to me for 8yrs. Help outside TT suggested I total std mileage amounts outside TT and enter them as misc vehicle deduction.  I lost 7yrs of vehicle deductions because of the mistake. On the order of 30% of profit. Huge loss. I have 25+ yrs experience with 1040 products that allow std mileage deduction correctly. TT Help has already had access to my problem and issued a case number. How to do it and it can't be done are the same problem.

[AliciaP1]

A partnership filing IRS Form 1065 is not eligible to claim the standard mileage deduction for vehicles.  You have years of experience with "1040 products" handling it because it is only allowed on an individual return.

If the partnership owns the vehicles, they should be entered as assets and depreciated along with actual expenses incurred.  If the partnership needs to reimburse you for your mileage on your personal vehicle, that is merely an expense to the business when you submit a reimbursement request with your mileage calculated at the correct rate.  It would be appropriate to list these expenses as Vehicle Expenses or Vehicle Reimbursements on the Partnership return.

@ART05  

[Opus 17]

Suggest you see an accountant.

Unless you live in a community property state, an LLC with more than one member must be reported on a form 1065 partnership return.  This requires Turbotax Business, which is different from "Home & Business" and is only available as a CD or download for PC, there is no Mac or online version.  The deadline for filing form 1065 is March 15, not April, and there are substantial penalties for filing late unless you get an extension.  As part of preparing the 1065, each partner will receive a K-1 statement that is entered on their personal tax return (form 1040).

You may have several years of tax returns to correct, and an accountant can help navigate the process, teach you what you need to know for the future, and help negotiate any penalties.

If you live in a community property state and the only two members of the LLC are spouses, then you file as a special entity where each spouse files a schedule C listing half the income and half the expenses. 

[ART05]

Thank you Alicia for trying this is very close. Is "Other Expenses" for vehicles a good entry point or do you suggest another?

Here's what we do, Husband's car goes 400 miles for weekend trade show. Husband provides the vehicle and fuel. If $0.50/mile, then husband contributes $200 additional funding to business to increase his %, and business expenses $200. Does that sound okay?

So the husband owns a little more of the business but the business doesn't have the $200 as if it paid it for use of the car. Similar as if husband contributed $200 to Business and Business leased a $200 vehicle.

[DianeW777]

Yes, you can use 'other expenses' to deduct expenses paid by the partnership for vehicles owned by the partners on your partnership return once they have been reimbursed. 

No, you cannot increase the business capital account (percent of ownership) and deduct the business expenses.  The partnership must actually pay the expenses to your husband if a deduction is what you want on the tax return. The advice provided by our Tax Expert @AliciaP1  is exactly how it should be handled.

In the situation you described, your husband can give money to increase his percentage of ownership, but the partnership must spend the money to reimburse the vehicle expenses of it's partners if you want a deduction at the partnership level.

@ART05