Person 2 says because the car is owned by the LLC, everything that they do is expensed 100% to the business.
That's only true if the vehicle is 100% business use. If there is any personal use, then the business use portion must be prorated based on the actual percentage of business use.
Person 1 also says that they use one of the cars strictly for business. Because they also have a second car dedicated for personal use.
Just because you have a 2nd care for personal use, doesn't mean the 1st car was actually used for 100% business use.
In both cases, the IRS requires you to keep records of actual use. If audited, you may be required to produce those records. If you can't produce records, then it's perfectly possible that any business use deductions could be disallowed.
remember the three golden rules when dealing with the IRS.
1) You are guilty until proven innocent.
2) The burden of proof is on the accused (that's you!) and not the accuser.
3) If it's not in writing, then it did not occur.
