I purchased a truck in February 2022 that qualifies for section 179 tax deduction. I opened up my own S corp 2 months ago. The truck is under my personal name. I qualify?

[teodorppetrov-gm]

I keep seeing online that the truck has to be under the company name rather than my personal name in order for me to write it off for work. Is this true?

[Anonymous_ · Accepted solution]

The corporation could take advantage of Section 179 (subject to limitations therein) if it owned the vehicle. 

Note that you are a shareholder of the corporation and employee of the corporation if you provide services to the corporation (i.e., the corporation is a separate entity) so you, personally, cannot use Section 179 (you are not the "business").

You might want to seek guidance from a local tax professional for this and other matters that may arise during the corporation's first year of operstion.

See https://taxexperts.naea.org/listing/service/corporations

[teodorppetrov-gm]

I can’t apply section 179 to my personal taxes? I purchased the truck under my name. I’m not getting the clarification I’d like. 

[teodorppetrov-gm]

I’ve been working as an independent contractor for a few years now and I finally opened up my own company late last year. I should be able to write the truck off under section 179 as an independent contractor. I won’t be able to do it under my business name as I opened it up late last year and the truck isn’t under my company name. I’ll have to just file it as a business expense on my own name. 

[Anonymous_]

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@teodorppetrov-gm wrote:

I should be able to write the truck off under section 179 as an independent contractor.

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That would be correct, provided you are using the truck as an independent contractor (i.e., sole proprietor). 

To the extent the truck is being used by you for the business of the corporation, the corporation cannot use Section 179 (it does not own the truck), although the corporation can reimburse you for expenses and deduct those costs on its 1120-S.

[Mike9241]

you and the s-corp are separate tax entities. Since the S-corp is not the owner it can not take section 179 nor any depreciation on the vehicle.   you own the truck but you are not the business there fore you can not depreciate the truck.  you could submit a bill to the S-corp in 2023 to reimburse you for the usage of the vehicle for the business mileage use based on the standard mileage rate. the S-corp would not get a deduction until the year paid.  you must have written records to support the mileage for reimbursement. 

you could always retitle the vehicle  to the S-corp then depreciation (but not 179) could be taken.

Property is valued at the lesser of its adjusted basis or its fair market value when it’s donated or converted.

there are downsides to this. if it Is a corporation (rather than an LLC electing S-Corp status) the transfer would likely be treated as paid-in capital. some states impose franchise taxes based on the total of stock +paid-in capital

if you transfer the truck you must keep contemporaneous mileage records for the use of the truck. failure and the IRS could deny any deduction related to it.  if the vehicle is used for personal purposes, the IRS requires you compute the value of personal use.  (there are exceptions for certain vehicles see the link) and add iyt to your W-2. then the S-corp gets the full deduction 

https://www.patriotsoftware.com/blog/payroll/personal-use-company-vehicle-car-tax-pucc/ 

[teodorppetrov-gm]

Am I able to write the truck off as an independent contractor using section 179? I know business friends who have done this before and they don’t have their own business, just independent contractors. If so, then that will be satisfactory for my purposes for this years tax season.