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Can an S Corp capitalize and deduct automobile expenses if the title is held personally by the owner?

My client is an S Corp. She owns a car and the title is in her personal name. Can she capitalize and depreciate the car in the S Corp and deduct actual expenses? I think she will need to sell the car to her corporation, including paying sales tax on the transaction, in order to deduct these expense. Any thoughts or advice is appreciated. Thanks.


Steve Sheridan
Title: Associate
Company: Dean Lewis Associates
(Associate, Dean Lewis Associates) |

I think you're on the right track. I'm I'm not a CPA though so I'm sure others can confirm with more authority. I believe the corp has to own the car to capitalize it. One thing to remember is when the corp does own the car and she uses it, PUCC comes into play.

Blake Garland
Title: CFO
Company: Blank
(CFO, Blank) |

I ran into the same issue recently. Your client can not expense 100% against the S Corp. The S Corp will need to create an 'auto lease expense' on the general ledger. Then your client will have to track her mileage usage to determine what is personal use versus business use. You might want to look at the MileIQ app on your iphone. It is a pretty simple way of tacking care of tracking those figures. You can expense only her business usage. You might want to allocate the other personal usage against a shareholder draw account if the company is cutting checks against the entire note as it is considered an income to her. The important thing is to make sure you have your mileage report (personal vs. business) on file in case those transactions are audited.


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