LLC and Truck Expenses

[Yardley CPA]

A couple of questions pertaining to an LLC- Sole Proprietor.  Landscape Business.

1. Can the owner of the LLC sell the business his personal truck to be used by the business?
2. Business currently has 3 business vehicles.  In each case, it was more advantageous to utilize the mileage versus actual expense method in determining the amount to be included on the Schedule C as auto expense.   None of the three vehicles are being depreciated in the true sense.  It's my understanding the mileage method incorporates a component of deprecation?  The owner has purchased a new business vehicle which he expects to have much lower mileage than the fleet he currently has.  Can that new vehicle be depreciated versus using the mileage method?

 

[Lee B]

5 minutes ago, Yardley CPA said:

 

1. Can the owner of the LLC sell the business his personal truck to be used by the business?

 

Not really, you just have an asset whose usage is changing from personal to business.

 

[Abby Normal]

You and should title the truck in the LLCs name, but it won't be a sale because you can't sell to yourself.

Vehicle mileage depreciation:
https://www.irs.gov/publications/p463#en_US_2017_publink1000298667

By the way, ATX calculates this correctly as depreciation.

Yes, you can pick and choose mileage vs. actual by vehicles, but you can't use mileage for 5 or more vehicles.

[DANRVAN]

7 hours ago, Yardley CPA said:

A couple of questions pertaining to an LLC- Sole Proprietor.  Landscape Business.

1. Can the owner of the LLC sell the business his personal truck to be used by the business?

No, because he and the business are the same entity.  LLC has no meaning for tax purposes.

[Pacun]

It is my understanding that you have to use the same method for all your vehicles.

[Yardley CPA]

9 hours ago, Pacun said:

It is my understanding that you have to use the same method for all your vehicles.

It is my understanding that you have to use the same method for all your vehicles.

Pacun...I recall that all vehicles needed to follow the same method as well.  However, the LLC currently has four vehicles using the mileage method.  In follow-up to Abby's comment about that you can't use mileage for 5 or more vehicles, I'm having a difficult time finding an opportunity to choose the mileage method for this fifth vehicle.  Maybe ATX, following the regulations that Abby sites above and does not allow the mileage method as an option.  I've added the vehicle to fixed asset manager and will depreciate it accordingly.

[Abby Normal]

I've never heard that you can't use different methods for different vehicles but the difficulty is getting the actual expenses for each vehicle.

[Abby Normal]

10 hours ago, Pacun said:

It is my understanding that you have to use the same method for all your vehicles.

I find that very hard to believe. Do you have any cites or articles?

[jklcpa]

1 hour ago, Yardley CPA said:

I'm having a difficult time finding an opportunity to choose the mileage method for this fifth vehicle.

Once you reach five vehicles, you can't use the mileage method. 

 

[Yardley CPA]

1 minute ago, jklcpa said:

Once you reach five vehicles, you can't use the mileage method. 

 

Thanks to all who replied. 

For arguments sake, assume you have three vehicles that are all mileage.  If you purchase a fourth vehicle can it be depreciated conventionally or must you select mileage for the fourth?  Based on the discussion in this post, I think you can choose mileage (since its less than five) or you can choose conventional depreciation? 

I recall you couldn't change the selection from year to year and if you pick mileage for a vehicle it stays mileage.  However, you can choose conventional deprecation on a case by case basis for any NEW purchases.  Again, keeping in mind that once you reach five vehicles, you can't use the mileage method for that fifth vehicle or any vehicle purchases that follow.  

I hope I haven't made this more confusing. 

[Lion EA]

If you start with mileage, you can change (but, it's a pain). If you start with actual, you stay with actual.

Each vehicle is a choice for the owner. Until he/she owns a "fleet" of five or more, then the IRS takes away some choice.

[jklcpa]

^ What Lion said.

There are additional rules for the "five or more" where they could still use the mileage if they are rotated in and out of use so that no more than 4 were in use at a time. It's in the pub that covers car expenses if anyone is so inclined.  Seems like a hassle and what client would have those records anyway!!!!