Car purchase as expenses

[chutki0700]

I have an LLC. can I sell one of the house and buy a new car under company name.?  Can the purchase of the car be shown as expenses and bring down the capital gain tax from the sale of the house

[Critter-3]

You are mixing up cap gains income on a Sch D  and ordinary expenses on the Sch C ... although they may offset each other in the long run on the form 1040 they do not directly impact each other on the same form.  

[chutki0700]

Appreciate but I am a layman in tax.  Hence posting here to understand better 

do not understand the legal term.  
so if I sell the house under my LLC And purchase the car under LLC I can show my less capital gain?

[Critter-3 · Accepted solution]

Yes but no ... to a lay person it will look like that but ordinary income/expenses and capital gains/losses are treated differently on the return. 

Your single member LLC  will sell a property where the sale will be reported on the form 4797 and the cap gains will go to the Sch D and any ordinary income from the depreciation recapture on the form 4797 to the form 1040.  If you have not been depreciating the property that you owned and rented then RUN to a local tax pro to get this corrected properly.

Then your LLC buys a new vehicle on which you will either use the standard mileage rate to expense the auto  OR  the actual expenses + depreciation and/or 179 deduction.  Again if all this is greek to you  please sit down with a local tax pro to be educated better. 

[chutki0700]

That’s the biggest challenge to get a tax person who has knowledge and is honest.  I contacted few and they charge hourly and at the end give me the information that I already read here or on google 

[Critter-3]

Education may be paid for or gotten on your own ... please take the time to do things right as making corrections later  can be more costly than a consultation fee.  

If you are new to being self employed, are not incorporated or in a partnership  and  are acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-NEC for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf 

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf 

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

Publication 463 Travel, Gift, and Car Expenses

https://www.irs.gov/pub/irs-pdf/p463.pdf 

Publication 946 … Depreciation

https://www.irs.gov/pub/irs-pdf/p946.pdf

          

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed

          
Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button