make sure to put the cash into the S-Corp so it is the entity that purchases the vehicle. this keeps it clean so should the IRS look at the transaction it is clean. You could have problems with the IRS if the title were issued in your name rather than the business.
if I were doing bookkeeping for the Corp I would debit Vehicle and credit Additional Paid-in Capital for $12,500. it is listed on the new vehicle invoice as a trade-in. then you write a check from the Corp to the dealer for the net balance. Debit Vehicle and Credit Cash.
the value of the vehicle is now the full purchase price (obviously net of incentives) and that's what you depreciate.
the dealer should be able to handle this even though the title of the old vehicle is your name not the corp
as an aside rather than 179 see if bonus depreciation produces the same effect. the are some annoying issues with 179 depreciation.
as another aside unless you are familiar with the ins and outs of having an S-Corp I would strongly recommend you use a tax pro for the first-year return. And don't forget your salary.
