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Lev
Lev, Tax Advisor
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I am a real estate sales person. I leased a car in 2007.

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I am a real estate sales person. I leased a car in 2007. For 2008 Taxes I am taking the actual costs at my 85% business use. On February 11, 2009 I incorporated (S-Corp) and set up a separate checking account and am paying myself a reasonable salary. My question is who should pay for the lease and how should I account for it.   I prefer to take the actual costs since it is a BMW. The lease will be up on March of 2010.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

You will do deduction in similar way - but will deduct on the S-corporation tax return - 2008 Form 1120S

S-corporation will pay 85% (according to the business use) and you will pay 15%.

 

If S-corporation pays 100% - it should account for 15% as wages paid to you.

If you pay 100% - you should account 85% as your loan to S-corporation that would be paid back.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22643
Experience: Taxes, Immigration, Labor Relations
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Customer: replied 5 years ago.
So if I pay it, how do I deduct it. Is it deductible auto expenses and then count the loan payments as income?
Customer: replied 5 years ago.
So if I pay it, how do I deduct it. Is it deductible auto expenses and then count the loan payments as income?

Expert:  Lev replied 5 years ago.

 

If you pay business related expenses for S-corporation - that should be accounted as you give a loan to your corporation and then the corporation pay you the loan back.

On your personal tax return - the loan is not a deductible expense and the repayment is not a taxable income - you do not need to report it.

 

You deduct all car related expense on the S-corporation tax return - not on your personal return.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22643
Experience: Taxes, Immigration, Labor Relations
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