For buying a truck-for tax purposes-in my name or business?

[Debra]

Hello!

We're trading in for a bigger truck with less mileage. I'm wondering if I need to put it in my name or my husband's and I's name or my business name...or does it make any difference? Thanks! Debra

 

[David Mullen]

If you put it in your company name, depreciate the truck and claim expenses for it for tax purposes, you may be asked to prove that you use it in your business rather than for pleasure.

Tax audits are not common but they are thorough when they happen.

 

[Terrel L. Shields]

I'm no CPA, but if you are co-mingling your personal use and business use (i.e.-part of the time the vehicle is used for business as opposed to 100% business use) then you can run into problems under an IRS audit.

If you are an S Corporation, I believe it would make more sense to buy the vehicle in your name and lease the auto back to the corporation by the mile, month, etc. After all, the advantage of S is to avoid paying more Social Security taxes than necessary. "Unearned" income (rents, royalties, etc.) do not require SS taxes be paid in the same manner as "earned" (salary) income.

My corporation leases my office, car, equipment from me. The only requirement is that is be a bona fide reasonable lease (e.g. - 34 cents a mile; $200/mo for equipment; say $8-12/SF for office space.) The corp. pays me a monthly salary, pays my certification fees, education fees, etc. , and excess monies are taken as dividend at the end of the year.
ter

 

[larryhaskell]

Terrel:

You have excess monies?

 

[Debra]

Hello!

Thanks for the reply. Are you incorporated? Is your business ... Inc.? Debra

 

[Anonymous]

I asked my accountant a similar question and he told me that it really didn't matter since the IRS allowance for mileage is so high.

 

[Restrain]

It all depends on how you run your business. If you have a corporation or LLP, etc., you may want to put the truck under the business name just like you do your other equipment. However, as most of us are individuals, it's under my name and I take the mileage.

 

[Mountain Man]

What Terrell said is how many Realtors in my area buy cars. Inc or Corp. themselves, buy, and then lease back. BUT, the money MUST actually be paid back to the business as per the lease terms.

Me, I just buy a car and take the milage deduction. I keep an immaculate milage log book, becomes a habit, and check the little box on my tax return that indicates that I do have a second car for personal uses. Got an old 4X4 for going to my fishing holes. :mrgreen:

 

[Anonymous]

Yes, my company is officially Shields Valuation Surveys, Inc. and it took a full year to get it set up reasonably well. IRS gave then took back my EIN, the lawyers who prepared the papers were about as good at it as I was without them. They don't do S corp paperwork for you , and you have only 75 days to declare S status after beginning business. You lose the benefit of the SS tax advantage I mentioned above without S status.

If you incorporate, then I advise you do it yourself over the internet and with the corporation commission or Secy of State (whoever in the state handles that probably has a generic form) My experience with supposedly experienced lawyers was not good. At least not any better than doing it myself. In fact, my CPA walked me thru it, prodding me to prod the lawyers along. And I ended up correcting the EIN forms, setting my CPA up w/ power of Atty to discuss tax matters with the IRS, etc.

As for accumulating assets in the corporation's name, consult your Tax atty or CPA! I know one case where a lawyer suggested a couple create a corporation and a trust. Ended up with the thing screwed up. The accountant ended up dissolving the corp for them to keep them from paying huge amount of estate tax on transfer of a $1,000,000 piece of property. That was the purpose of the trust in the first place - orderly tranistion of the property from one generation to another.

 

[xmrdfghap]

<span style='color:brown'>Unless you have a business entity (C-Corp, S-Corp, or LLC) you are a sole-proprietorship and you ARE the company. Taking the title in the name of the busienss is not an option, because you would be taking it in the name of "Debra, dba The Appraisal Company." This does nothing for you as you will still be filing a Schedule C and taking the milage deduction, and you will still be the owner of record.

If you are an S/C-corp or an LLC and do not have a CPA/PA (unless you are one or the other) then you need to get one as soon as possible to fix your books so you can maximize your deductions and minimize your taxes.</span>