topic Switching from sole proprietorship to LLC (taxed as S-Corp) in Get your taxes done using TurboTax

Switching from sole proprietorship to LLC (taxed as S-Corp)

ProcessServerWA — Mon, 20 Jan 2025 23:15:52 GMT

I have run my sole proprietorship for several years, but changed it to an LLC last year. While my S-Corp election was effective May 24th, I operated as a SP until June 30th, and then changed the name and started operating under the LLC on July 1st.

My vehicle is still in my personal name, so not sure how to properly deduct the mileage, etc. for that. Should I have been reimbursing myself for use of a personal vehicle? With about 15000 miles for the 2nd half of 2023, it would be about $10k going by the standard mileage rate. (I did pay myself a reasonable wage).

From what I've read, on the 1120S, you can only deduct actual expenses on company vehicles but since this isn't a company vehicle, I assume I'll need to account for the mileage and vehicle expenses on my personal return?

Re: Switching from sole proprietorship to LLC (taxed as S-Corp)

KeshaH — Mon, 20 Jan 2025 23:31:09 GMT

You can deduct your business mileage on your Schedule C for the months before your started operating your business as an S Corp.

For the S Corp to deduct business miles, it should be reimbursing you for the use of your personal vehicle. Otherwise, unreimbursed work-related expenses are generally not deductible on personal federal returns for tax years 2018-2025. You may still be able to take this deduction on your state return, however.

If your S Corp didn't reimburse you for your vehicle related expenses, those expenses would not be deductible.

For more information:

- Unreimbursed employee expenses

Re: Switching from sole proprietorship to LLC (taxed as S-Corp)

ProcessServerWA — Mon, 20 Jan 2025 23:56:50 GMT

How would it affect it if the company was paying the loan payment on the vehicle, and all gas/repairs? The vehicle is in my personal name still, but all costs are paid by the company. The loan is paid from a business account, and gas/repairs paid on a credit card that is then paid from that same account.

Thank you for your help.

Re: Switching from sole proprietorship to LLC (taxed as S-Corp)

ThomasM125 — Wed, 22 Jan 2025 21:17:47 GMT

You can treat the loan payments and gas/repairs as auto expense reimbursements to yourself . The best thing to do would be to complete an expense report to calculate the allowable vehicle expense based on the standard mileage allowance ($0.67 per mile in 2024). The amount of any reimbursements in excess of that amount would not be deductible.