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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10122
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have an S corp. Our profits are rising this year and I am

Customer Question

I have an S corp. Our profits are rising this year and I am looking for expenses to reduce taxable income. Can the S corp buy a car, then lease it to me? It would be titled to the business and insured to the business.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

Likely the biggest bank for the buck you'd get is simply to take a §179 deduction this year, before is goes away.

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Vehicles used in your businesses qualify - but certain passenger vehicles have a total depreciation deduction limitation of $11,060, and the one time 500,000 limit has been dropped to 15,000 for this past year.

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If you buy an SUV with with a gross vehicle weight rating above 6,000 lbs but no more than 14,000 lbs), those vehicles qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31.

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What § 179 does is allow you to accelerate a full 15,000 of the depreciation that would normally have to be spread out over the life of the equipment all into the year placed into service, as an expense against other income.

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But again, there is talk, and petitions, but so far this is going away on Dec 31st of 2015.

Expert:  Lane replied 1 year ago.
Expert:  Lane replied 1 year ago.

Because the S-Corp is a pass-through, the car doesn't have to BE in the company's name, by the way... but how they're handled, the tax treatment of auto expenses for S-corporation shareholders differs, based on whether the business or the shareholder owns the vehicle.

Expert:  Lane replied 1 year ago.

..

Expert:  Lane replied 1 year ago.

SO first you'd want to determine i the 179 expense could all be used this year (S-Corp owns the car here). If you can't use it all, then it might make moresense to just own the car personally and let the S-Corp reimburse you for the business use.

...

Expert:  Lane replied 1 year ago.

Hi,

I’m just checking back in to see how things are going.

Did my answer help?

Let me know…

Thanks

Lane

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