Tax Year Prior to 2020: Scorp Auto deduction

Forum|Forum|6 years ago
January 13, 2020
1 reply
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Can an scorp deduct auto expenses for a vehicle used by the scorp, but not owned by the scorp?

HelenC12

Level 15

No, an S Corporation can't deduct auto expenses for a vehicle that it does not own. However, the S Corporation can reimburse you directly for the vehicle expenses.

These paid expenses then reduce S-corporation income by that amount and only the reduced income passes through to you on your K-1.
If you're not the only shareholder, you need to keep track of auto expenses and report them to the S Corporation so that all the S Corporation shareholder's share the expenses equally. See Business Use of Vehicles.

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drbones

Level 2

So, to clarify, in TurboTax business you just add up all the monthly lease payments, gas, parking, auto insurance that the employee (me) paid from personal checking account for the year, multiply that by the business use percentage, and put that into Vehicle Reimbursement Paid?

Then you just move the total from Business to Personal checking account and make sure the accountable plan can account for the percentage?

ThomasM125

Level 15

You have to have an accountability plan. In other words, you need to submit an expense account report periodically to justify the business use of the auto. Otherwise, you can end up being taxed on the reimbursement you receive from the company.

You can read more about this in IRS publication 463 as follows:

https://www.irs.gov/publications/p463

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