Gifting a car to a contractor vs. Sell it to them below FMV

I purchased a used vehicle in my LLC's name with the intent of providing transportation for one of my contractors. The contractor is currently paying all expenses and insurance on the car. And, I need to transfer title to enable the contractor to register the car in their name and remove my company from liability.

 

The car is used for company business as well as personal use. The car is well below the maximum threshold for "gift" taxes. (The contractor won't have to pay a gift tax.) Or, the potential sale price would be so low that the state sales tax required to transfer title would be negligible.

 

Can a company gift an asset? I'm trying to determine if there are greater tax advantages or disadvantages to my company if I take a loss in selling it below market rate (FMV)!?! However, I've read conflicting advice online about the tax advantages/disadvantages for a company when gifting a car vs. selling it  (at a loss - below FMV)!?! What is the recommended way to do this for a small sole member LLC?

 

Thanks in advance for your help!

 

 

Questions:

1. How do I avoid having to pay employee taxes on the vehicle as compensation or fringe benefits for services rendered?

 

2. Can I take a tax deduction for gifting a vehicle to a contractor/employee? If so, how do I do that?

 

3. What are the tax advantages/disadvantages of selling it below FMV? And, what is the best way to do that to avoid triggering an audit?

 

4. If I sell it, can I include a clause on the Bill of Sale that indicates the payment it to be held in abeyance for XYZ reasons (i.e., forgiven)?