- quote -

SMR only.

--
Thomas E Healy, CPA, PC
1650 38th St., Ste 202W
Boulder, CO 80301
Please send email to: tom[at]tomhealycpa.com,
since I block all email at my newsgroup address.
phone (303) 443-1804
fax (720) 489-3772

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

<crystal[at]rightonthenumbers.com> wrote:

- quote -

My "seat of the pants" response is that the client has every
right to expense the business portion of the interest,
either by submitting for reimbursement under an accountable
plan or as a "Sch E expense" offsetting S corp income.

Mike Lewis, CPA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

crystal[at]rightonthenumbers.com wrote:

- quote -

Nothing illegal about that.

- quote -

So then, he receives a reimbursement for half of the
otherwise personal interest.

Would you not think that IRS would consider that income to
the person? And of course maybe a deduction to the S corp,
but in total, a washout.

Remember also that any corporation is a separate person
under the law, and should therefor be paying only ordinary
and necessary" expenses, in this case should be defined as
for the "utility" of having access to a vehicle for company
use. I think any other corporation would balk at also
reimbursing interest expense, hence it would not meet the
tests above we have all come to know and respect.

ChEAr$,
Harlan Lunsford, EA n LA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Need a little clarification-

Client pays interest on loan for personal vehicle; is
officer & only shareholder for an S Corp.

I know the client can submit expense reports to S Corp for
standard mileage rate for biz use, but what about % of loan
interest proportional to % of biz use?

I know as employee of someone else's corp they would only be
able to submit SMR, because the interest would be considered
"personal" and normally nondeductable by emloyee.

I also know that as a sole proprietor, the client *could*
take the biz % of interest in addition to SMR, since
interest is not an "operating" expense like insurance, gas
etc, and if the biz had bought the car the interest would
normally be deductable.

So now Im trying to wrap my brain around which category the
client would fall into with an S Corp - "just an employee"
or is the biz % of interest still deductable? The client
has already submitted interest on their expense reports all
year.

Thanks!

Crystal Thibodeaux

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->