I am thinking of buying or leasing a car in my company name (an S Corp). What are the tax ramifications for it?
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Hi! I'm a CPA with TurboTax Live. Essentially, the purchase or lease of a vehicle will be allocated between personal and business use with the personal mileage being non-deductible and business being deductible. Generally, you will have the option to take actual expenses (which will likely give you a larger deduction up front with depreciation) or the standard mileage rate (which will tend to give you more in deductions over time). It is important to remember that only job site to job site trips will be deductible (no commuting) so if you have a home office as well, you will tend to have more deductible mileage.
Thanks. I assume the monthly payments would be made by the company. How is depreciation handled? Is it better to lease it or purchase it with monthly payments? I assume if it is leased it is a straight expense without having to depreciate it? If it is bought and then sold how is revenue from the sale handled? I'm just not sure which way is simpler/better.
Following up with you tom775, one thing to keep in mind is the percent of business use. This is why it is important to choose before you start reporting between Standard Mileage and Actual Expenses. Once you start reporting you cannot switch.
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