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Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience:  CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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How can I expense automobiles purchased by an LLC.

Customer Question

As principal of a small LLC in the state of New York, I need to know how I can expense the purchase of an automobile as a business expense. Can I claim the whole payment and insurance as an expense, a percentage, one or the other, etc. Am looking for definitive info for NYS as well as IRS.
Submitted: 11 years ago.
Category: Tax
Customer: replied 11 years ago.
As principal of a small LLC in the state of New York, I need to know how I can expense the purchase of an automobile as a business expense. Can I claim the whole payment and insurance as an expense, a percentage, one or the other, etc. Am looking for definitive info for NYS as well as IRS. Also, do I need to file any paperwork, etc.
Expert:  Christopher Phelps replied 11 years ago.

You can have the LLC either purchase the vehicle or lease it. The LLC would then be responsible for all payments including debt/lease payments and all operating expenses. The hitch here is that to the extent the vehicle is used for personal purposes, you have to recognize income for the value of that personal use. This amount once determined would either be treated as a non-deductible expense or it would be considered as a guaranteed payment to you by the LLC (assuming partnership/disregarded entity treatment).


Most employers typicallyuse the "annual lease value" method for calculating the value of the personal use of the auto. The LLC should maintain all expense records. You should maintain a log that documents every trip in the vehicle including date, miles driven, purpose (i.e. business v. personal), etc. The annual lease value will then be multiplied by the ratio of personal miles driven to total miles driven, to determine the value of your personal use.


See IRS Pub 15b for a fuller discussion of the methodology starting at page 16 ( http://www.irs.gov/pub/irs-pdf/p15b.pdf).


Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

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