Partner owned vehicles

[DanaL]

If partners purchased a vehicle, not the partnership, are the down payment and monthly loan payments expensed? 

Seems the down payment, normally an asset if owned by the partnership, would be a distribution to the partners instead?

For the monthly payments, the interest would be expensed but the principle would also be distributions?

[qbteachmt · Accepted solution]

Down payments and loan payments are never expense. The interest for a business loan would be an example of an expense.

The down payment is not the Asset; it's how you partially paid for an asset. The down payment is part of how you covered the cost, lowering the amount of debt one will need to cover that purchase.

Basis (cost) <== asset value

Funds used and loan taken = how you intend to Pay for that cost, over time

It appears these people are taking personal draws from the business and using it personally. Nothing here is part of their business expenses. They had better not be paying these loans directly from the business banking. Just deciding something should be paid from business does not turn it into a business activity.

If these people are using personal vehicle for business purposes, they should turn in a mileage report for proof, to be reimbursed under the mileage allowance of an accountable plan.