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Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 45890
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I have a C corporation (I thought I had made it into a S corp

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I have a C corporation (I thought I had made it into a S corp but didnt) so I can't write off the loss on my personal tax return. Is there something else I can write off from my corporate return on my personal tax return. Help!
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Unfortunately, a C Corp is taxed entirely as its own entity. None of the tax attributes...either on the income side or the expense side received or incurred at the corporate level can be deducted on your personal tax return. If you have incurred personal expenses that are business related, you can deduct those on your personal return on Form 2106. Also, if you own your own vehicle and you use it for business, then there would be deductions available for that business use.



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aware that the information provided here is not legal advice. Rather it is
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Customer: replied 1 year ago.

Can you please give me examples of personal expenses that can be deducted?


 


Also do I deduct mileage for the auto or repairs, service, etc?


 


Thanks!

Expert:  Richard replied 1 year ago.

They would not be personal expenses; rather they would be ordinary and necessary business expeneses related to your business or employment that you incurred personally. These could include travel, meals and entertainment, home office, computer equipment and supplies, etc.

The rules on automobile use for business is as follows:

First, you must use the car for business. If so, you can then explore whether to use the mileage deduction method or actual cost.

Standard Mileage Method?

The milegage amount is 55.5 cents per mile for 2012. That includes most of the cost
of operating the car--depreciation, repairs, gas, oil, etc. In addition, you can
deduct tolls, parking expenses (but fees to park your car at your place of work
are nondeductible commuting expenses). If you're an employee, you cannot deduct
any interest paid on a car loan. However, if you are self-employed and use your
car in that business you can deduct that part of the interest that reflects the
business use of the car. For example, based on the miles driven during the year,
you use your car for your sole proprietorship 70% of the time. You can deduct
70% of the interest for the year on your Schedule C. If you itemize, you can
deduct personal property taxes on Schedule A of your Form 1040 whether or not
you use the car for business. If you do business as a sole proprietorship, and
use your car in your business, you can deduct the business part of personal
property taxes on Schedule C and the remaining portion on Schedule A.

Actual Expense Method

If you're using the actual expense method you can deduct all the expenses of
operating the vehicle. That includes gas, repairs, insurance, lease payments,
depreciation, etc. But you'll have to maintain records and keep the receipts of
all the expenses. Lost the receipts for those gas expenses in April? If you're
audited the IRS can disallow the expenses. And if you're audited there's a very
high probability the IRS will ask for your car logs, expense documentation, etc.
for all business vehicles. Agents know most taxpayers are lax in this area and
most of the time an agent is almost guaranteed to disallow some deductions.

You can only deduct the portion of the expenses incurred for business use.
For example, you drive your SUV 10,000 miles during the year. Only 6,000 of
those miles were for business. You can only deduct 60% of the expenses.

For a full discussion of this topic and additional limitations and rules, go to: http://www.smbiz.com/sbfaq024.html

Customer: replied 1 year ago.

Ok. Two last questions please. My company was a relaxation/massage company and I paid for all of the dry cleaning of the robes. Can I deduct that? I paid my business partner's mother $200 per month to do that. Will I need a receipt from her?


 


Also, even though I am the owner of the corp/company I can still deduct as an employee the above services?


 


Thanks!

Expert:  Richard replied 1 year ago.
If you paid these personally and were not reimbursed, these would be appropriate ordinary and necessary business expenses you could deduct. You will need documentation in the event you were audited.
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 45890
Experience: 29 years of experience as a tax, real estate, and business attorney.
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