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If I own an LLC, how can I deduct the lease cost of a business vehicle
AI accountant’s answer:
If you own an LLC and want to deduct the lease cost of a business vehicle, the first thing to consider is the extent to which the vehicle is used for business purposes. The IRS allows you to deduct a portion of the lease costs, based on the percentage of time the vehicle is used for business. To deduct the lease cost, follow these steps: 1. Calculate the business use percentage: Keep a log or record of your vehicle's usage, highlighting the miles driven for business-related purposes and the total miles driven throughout the year. Divide the business miles by the total miles to obtain the business use percentage. 2. Apply the business use percentage: Apply the business use percentage to the lease payments made during the tax year. This will give you the deductible amount of the lease payments. 3. Account for any vehicle lease inclusion amounts: For leased vehicles valued over a certain threshold (determined by IRS tables), you may have to include a "lease inclusion amount" in your income. This amount reduces your lease expense deduction. You can find the lease inclusion tables in IRS Publication 463, and they are based on the initial fair market value of the leased vehicle and the year in which the lease began. 4. Report the deductible lease expense: Report the deductible lease payments on Schedule C (Form 1040) if you are a single-member LLC, or on Form 1065 if you are a multi-member LLC. In both cases, the deductible amount should be reported under the "Car and Truck Expenses" category. Ensure you include all other applicable vehicle expenses incurred, like insurance, maintenance, and fuel, which are also deductible based on the business use percentage. Remember to maintain proper documentation of your leased vehicle’s usage and expenses to support your deductions in case of an IRS inquiry. Please note that my response is for general informational purposes only and should not be considered as tax or legal advice tailored to your specific situation.
Comment from reviewer
Jacques Seys, CPA
Not Correct.
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