Section 179 & S-corps

[EmpirE231]

I thought I'd turn to the RDP brain trust for business financial advice, since this place has the answers for everything lol

couple questions....

1. anyone using the 179 deduction for SUV's / Trucks? If so... have you had any issues with it, or is there anything one should know before trying to use this deduction?

2. if you are an S-corp... is it better to purchase the vehicle through the corporation (registered in business name) ... or through the individuals of the company (shareholders of the S-corp (pass through income))

3. any benefit to purchase vs. lease?

 

[Done-it-again]

We buy every couple of years and run it thought the company name. We are a LLC so it's also tied to the owner of the company, not sure how the S-corp is structured.

Buying you are able to take 100% depreciation the first year and the interest is tax deductible. As for leasing my understanding is that you only write off portion of the lease... So you are not really lowering your tax liability.

Now when you sell the purchased SUV you need to claim that on business taxes, since you depreciated it.

Father just bought his Black Label Navigator for 2021 sec 179

 

[Inland Air Balance]

I run an S corp, and have sec 179 vehicles in the mix,,, you need to call Lee Kimmel at Kimmel Associates CPA. 909-445-8864 or [email protected] I picked them up from a referal here last year. He's a river person as well, great guy!

 

[EmpirE231]

Bump... any other feedback on this?

will definitely be reaching out to a new CPA soon, as mine is not much help.

 

[WYRD]

I run an S corp, and have sec 179 vehicles in the mix,,, you need to call Lee Kimmel at Kimmel Associates CPA. 909-445-8864 or [email protected] I picked them up from a referal here last year. He's a river person as well, great guy!

 

[WYRD]

Bump... any other feedback on this?

will definitely be reaching out to a new CPA soon, as mine is not much help.

You might think about buying personally and leasing back to corporation

 

[LargeOrangeFont]

I have an LLC and did it. Worked out great, took the depreciation over 2 years.

 

[EmpirE231]

I have an LLC and did it. Worked out great, took the depreciation over 2 years.

Did you purchase or lease? and did you it through the LLC or individually?

 

[Done-it-again]

You might think about buying personally and leasing back to corporation

I do this with my RV in my Montana LLC , lease it my business as I use it for business trips. I don't stay in hotels...lol

 

[OldSchoolBoats]

Used section 179 this year through my LLC. Purchased vehicle individually and pay it through my business.

 

[EmpirE231]

Used section 179 this year through my LLC. Purchased vehicle individually and pay it through my business.

so vehicle registered to your personal name, but the LLC writes the check?

 

[OldSchoolBoats]

so vehicle registered to your personal name, but the LLC writes the check?

Yes

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[WYRD]

so vehicle registered to your personal name, but the LLC writes the check?

Be careful with that. license board considers that commingled assets and can be grounds to pierce your corporate Veil

 

[LargeOrangeFont]

Did you purchase or lease? and did you it through the LLC or individually?

Purchase. I bought it through the business, but my accountant said with an LLC it does not matter a whole lot either way. Based on my projections, the truck will be about "free". Basically the write off gave me everything back that I will lose on depreciation when I sell the truck. The plan is to buy a new truck every 4-5 years, rolling over my residual into the down payment of the new truck.

I am half tempted to sell it, as I could sell it for what I bought it for new 2 years ago, but my accountant said the tax implications will be higher if I sell now.

 

[boatpi]

Use it many times sometimes will purchase a vehicle and make payments through our S Corp. and LLC as long as the payments in the money is funded through those business accounts that’s all that matters. Never leased a vehicle but I comment made above her I have to bring the money back that’s accurate and when the vehicle sells the residual or the day of that vehicle that comes into the corporation if it’s paid off have to go back on the books and then onto the next vehicle.

it’s a no-brainer we even use it for a forklifts.

 

[Done-it-again]

Sec 179 is up to $1,050,00.00 for 2021 yr.

We have used it for trucks, suv's, machinery. Can also be used equipment/trucks as well.

 

[LargeOrangeFont]

Sec 179 is up to $1,050,00.00 for 2021 yr.

We have used it for trucks, suv's, machinery. Can also be used equipment/trucks as well.

The fact that it can be used on used trucks is great as well.

 

[EmpirE231]

Can the bonus depreciation from the 179, offset your income to show a loss for the year... or does it just cap out to bring profits to zero?

 

[boatpi]

I don’t know about the Yes there’s an accelerated depreciation that can be used I believe it came in about two years ago maybe three at the most.

 

[OldSchoolBoats]

Can the bonus depreciation from the 179, offset your income to show a loss for the year... or does it just cap out to bring profits to zero?

Doood, ask your CPA.....lol. There are a few good ones on here. I recommend @shintoooo

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[EmpirE231]

Doood, ask your CPA.....lol. There are a few good ones on here. I recommend @shintoooo

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definitely going to do that.... in the hunt for a new CPA at the moment.... just trying to get real world experiences from people who have done this.

 

[LargeOrangeFont]

definitely going to do that.... in the hunt for a new CPA at the moment.... just trying to get real world experiences from people who have done this.

For me the answer was no, we spit it up into 2 years to maximize the depreciation.

 

[Uncle Dave]

Been doing it for decades. I've been purchasing so cant help with lease info.

You will have to purchase it under your name and credit, but register the vehicle to the business.

Make sure you pay the bill from the business account. Insurance gasoline repairs etcetera.

Make sure the GVWR is ABOVE 6000 lots of guys get burned on this, and some lists of vehicles are wrong.
The Subaru Ascent was one of the models that burned poeple as it was 6000 on the dot. IF in doubt go by the capacity plate on the door.

Remember if you sell it after depreciating it the money you get is considered income.

Get a phone based program like Mile IQ and record your business use religiously.

IF you have no other vehicle for personal use you could get hassled by the IRS.

 

[zhandfull]

Curious if businesses using the 179 tax deduction pay cash or finance purchases.
Would make a nice tax break for cash purchase. I can see how it would potentially increase taxable income in future years while making payments if financed.

 

[EmpirE231]

Curious if businesses using the 179 tax deduction pay cash or finance purchases.
Would make a nice tax break for cash purchase. I can see how it would potentially increase taxable income in future years while making payments if financed.

from my understanding of what I’ve read so far, is that you get to take full depreciation write off the first year, whether it’s financed or leased. Regardless of wether you paid in full or made payments.

 

[Uncle Dave]

Curious if businesses using the 179 tax deduction pay cash or finance purchases.
Would make a nice tax break for cash purchase. I can see how it would potentially increase taxable income in future years while making payments if financed.

You can take the deduction regardless of cash or credit.

Not sure how an ongoing expense translates to an increase in taxable income in this situation

 

[LargeOrangeFont]

from my understanding of what I’ve read so far, is that you get to take full depreciation write off the first year, whether it’s financed or leased. Regardless of wether you paid in full or made payments.

This is correct. I financed the truck. Just paid it off a few months ago.

 

[measureoncecuttwice]

do it all through the S Corp . Can 179 deduct fully first year for federal. state has different laws depending which one you're in. Leasing gets more complicated and more limitations

 

[Uncle Dave]

do it all through the S Corp . Can 179 deduct fully first year for federal. state has different laws depending which one you're in. Leasing gets more complicated and more limitations

If the S corp can write a check its best to do it all through the S Corp.

In the case of a loan the lender cares not about an S corp and will only finance a person so someones social goes down against the credit. In this case the vehicle or asset should be registered to the company at the company address. Ive gotten away with company assets registered to me though, but was super strict about % of use and documentation.

 

[zhandfull]

You can take the deduction regardless of cash or credit.

Not sure how an ongoing expense translates to an increase in taxable income in this situation

I guess my point is, if you take 100% depreciation up front when using financing. There would be no depreciation available in future years. Therefore those future principle payments would have to be made with taxable income.

I'm no accountant so it is more of question than a statement.

I don't think you can depreciate 100% cost in first year under a 179 deduction and continue to write off principal loan payments in future years on same asset, can you?

 

[J DUNN]

1. We use it to the fullest extent reasonable. If I need a truck or machine in the next 12 months and I need write offs then I'll buy them in Dec to get the write offs for that year rather than wait and buy 6 months later. Bought 3 trucks last year for $70k each that I was going to buy this year anyways.

2. My CPA tells me to put them in my name. Mainly for ease of title. He says I still have all rights to use sec 179 because business (mines s-corp) pays all the down and payments for the vehicles. If in my personal name it makes initial title and later transfer of title WAY easier. Company insurance still cover them too.

3. I only buy. Pay the same as a lease but when payments are done I still get to keep the vehicle which by time of me wanting to sell it it's been depreciated on company books down to $0 value or close to it. So if I sell it for $10k, the company gets a payout of $1k and shows a profit and I have no idea where the other $9k goes.........lol, should I have started this with, "I know a guy....."

 

[Done-it-again]

1. We use it to the fullest extent reasonable. If I need a truck or machine in the next 12 months and I need write offs then I'll buy them in Dec to get the write offs for that year rather than wait and buy 6 months later. Bought 3 trucks last year for $70k each that I was going to buy this year anyways.

2. My CPA tells me to put them in my name. Mainly for ease of title. He says I still have all rights to use sec 179 because business (mines s-corp) pays all the down and payments for the vehicles. If in my personal name it makes initial title and later transfer of title WAY easier. Company insurance still cover them too.

3. I only buy. Pay the same as a lease but when payments are done I still get to keep the vehicle which by time of me wanting to sell it it's been depreciated on company books down to $0 value or close to it. So if I sell it for $10k, the company gets a payout of $1k and shows a profit and I have no idea where the other $9k goes.........lol, should I have started this with, "I know a guy....."

We do the same in Dec and take full right off for that year. Then all interest for the life of the loan is written off.

 

[530RL]

Be careful with that. license board considers that commingled assets and can be grounds to pierce your corporate Veil

Your point is very valid with respect to personal versus business liability in the event of an accident.

Something to consider. If you are the only driver, you are going to have personal liability as well as the company will have liability regardless as you were the driver.

If the asset is going to be driven by employees only, I would only title and purchase it in the name of the corporation, regardless of how it is taxed (C, S or LLC) to avoid most personal liability and only have corporate liability.

In either event if you use it for business and deduct it as a business asset yet insure it under your personal policy, disclose the use and make sure the corporation is an additional insured.

If it is not, many policies may not be required to defend the corporation but only you and the lawyer bills get expensive.

Lastly, always try to buy an excess liability/umbrella policy for yourself. They are cheap and given an accident between medical bills and other costs can easily exceed your auto liability coverage they are a cheap hedge.