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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 789
Experience:  Years of Experience in Business & Personal Taxes
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iF I BUY A CAR UNDER MY BUSINESS NAME AND USE IT FOR BOTH BUSINESS

Resolved Question:

iF I BUY A CAR UNDER MY BUSINESS NAME AND USE IT FOR BOTH BUSINESS AND PLEASURE BUT PUT ADVERTIZING ON MY CAR CAN i CLAIM THE WHOLE EXPENSE OF THAT CAR IN NJ . i ALSO OWN 2 PERSONAL CARS
Submitted: 5 years ago.
Category: Tax
Expert:  DanielleCPA replied 5 years ago.

DMC :

Hi and welcome to Just Answer! I'm happy to help with your tax questions. Feel free to interject at any time if you need clarification.

DMC :

No, if you use the car for personal use, you cannot deduct the entire expense of the car. One of two things will need to occur.

DMC :

You will need to either deduct only a portion of the expense based on the business use of the car, so if 75% business usage, you only deduct 75% of the auto expenses.

DMC :

Or you can add an amount to income on your W-2 to account for the personal use of company car. This amount would be subject to federal and state income taxes and Social Security and Medicare Taxes.

DMC :

The amount of personal use that should be reported is based on a percentage (the percentage of personal use) of the value of similar leased cars.

Customer:

But what about the signage on the car isnt that like a traveling billboard?

DMC :

The fact that you put the advertising on the car does not mean it is not being personally. It is highly unlikely this argument would hold up with the IRS on audit.

DMC :

When you are using the car personally, you aren't driving it around town to solely advertise your business. You would still be using it for personal errands, etc. Sorry but no.

Customer: Lol just a thought but anyway if I registered it under business and used it 50% for that is there any advantage of getting it registered commercial rather than personal?
DMC :

You're honestly not the first person to think of something like this, as I have had clients suggest something similar before.

DMC :

Having the car under the business's name keeps things cleaner for tax purposes.

DMC :

Also, if the car is registered under your personal name, then in the event of an accident, you would be sued personally. If it is registered under the business, then the business would be sued providing you with an extra layer of liability protection.

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