Ask Me Anything question: Income/expense distribution S-Corp vs. Schedule C

[btaxman]

I'm taking over a new client's return from a previous preparer. I'm trying to sort out what was done in previous years and trying to figure out the best way to approach it moving forward. The client has an S Corp. Income generated for this S Corp is only a result of the work of one individual (the client). Previously, income and expenses were distributed on the corporate and personal tax returns with a large majority allotted to the S Corp (e.g., 90 or 95%) and a much smaller proportion (5 or 10%) allocated to the Schedule C (for this same individual client). Then there were K-1's issued from the S Corp to the client each year. There are no other employees of the S Corp (although the spouse of the client is a co-owner of the S Corp) and the client only has this one business over the past couple of years. Revenue generated by the client has been issued in the name of the S Corp and deposited into the S Corp's bank account. A few times each year, funds are transferred from the S Corp account to the client's personal bank account.

1) What do you think about this set-up?

2) What is the best way to set this up moving forward?

3) In 2019, the client purchased a new vehicle (in the name of the client, not in the name of the S Corp), utilized ~85-90% for business purposes and ~10-15% for personal usage. We would like to take advantage of the special deprecation allowance and utilize it as a business expense in 2019. How do we correctly report this on the tax return(s)?