I have just recently formed a single-member LLC.
I'm using a car that is leased under my personal name. I was curious as to how I can have the payments deductible. I did some research and found out two solutions:
- Change the lessee to the LLC
- Have the LLC write me a check every month for the amount of the lease payment
Regarding #2, I know that I must keep detailed records for how I use the car. For example, I'm averaging around 70% use for business and 30% for personal. If I pay $10,000 a year for the car lease, then I owe the LLC $3,000 (30% for personal use), and the LLC gets a tax deduction on $7,000.
The LLC pays for gas and oil change, plus other expenses. Of course, only 70% of those costs will be deductible if I choose a expenses option over the standard mileage option.
My question is, does that make sense? Or is there any error in my understanding? Thanks.
