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Can a person lease a vehicle to an s corp they own?

Can a person lease a vehicle to an s corp they are an owner of?

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2 Replies

Can a person lease a vehicle to an s corp they own?

yes, the rent would have to be comparable to what an independent company in your area would charge. you have a personal reporting issue. rent of personal property would go on schedule c as would the vehicle expenses.  net income would be subject to self-employment tax. if there are repeated annual losses that may pose a tax problem - the IRS could argue it's a hobby deny the losses and present you with a tax bill.

 

Can a person lease a vehicle to an s corp they own?

Of course,  as an employee of the company being paid on a W-2,  you could have the company pay you for the use of the car under an accountable plan and add it to your wages.  

 

To offer an accountable plan, an employer must comply with three standards:
  • The expenses must have a business connection;
  • The expenses must be substantiated within a reasonable period; and.
  • The employee must return any money not spent to the employer, also within a reasonable period.

https://www.journalofaccountancy.com/issues/2020/feb/employee-expenses-accountable-plan.html

https://www.irs.gov/pub/irs-pdf/p5137.pdf

https://www.journalofaccountancy.com/issues/2020/feb/employee-expenses-accountable-plan.html

 

 

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