accountable plan for S Corp owner/employee and bonus depreciation

[DCG]

Hello All!

A quick question on the mechanics of this accountable plan.

Consider the following facts:

• Client has an S corp (100% shareholder) and purchases a truck in 2022 under his personal name due to better financing
• Client purchased truck in 2022 and plans to use it about 75% for business in his construction work 
• He completes the proper reimbursement form under an existing and implemented accountable plan for his S corp and wants to take advantage of  Bonus Depreciation in 2022
• Lets assume that the reimbursable amount under bonus depreciation is about $50,000 (75% of the purchase cost)
• However, his S corp does not have the full $50,000 available to pay the reimbursement.

What are the options here?

Is is ok for the S corp to pay over time (creating a note payable to S corp shareholder) or do you have to show the $ actually flowing from the S corp to the Employee/owner all in one transaction?

Thank you

[qbteachmt]

"Client purchased truck in 2022 and plans to use it about 75% for business in his construction work"

Which is why it should not be a corporate vehicle. The nonbusiness use is taxable to the employees through payroll, and that's a pretty significant amount of nonbusiness use.

"He completes the proper reimbursement form under an existing and implemented accountable plan for his S corp and wants to take advantage of  Bonus Depreciation in 2022"

He would turn in for Mileage, and the rate includes a component for gas, oil, maintenance, insurance (general operations) and wear-and-tear (depreciation).

"Lets assume that the reimbursable amount under bonus depreciation is about $50,000 (75% of the purchase cost)"

Are you trying to pass as expense his actual costs under an accountable plan, then?

Are you trying to sell that vehicle to the S Corp under an installment plan?

Are they wanting to lease the vehicle to the business? Because that is a circular reference and creates taxable income (and insurance risk) for that owner, as this no longer is a personal vehicle.

Some people try too hard to get too tricky, and totally overlook some great provisions that already exist.

[DCG]

@qbteachmt  - "Are you trying to pass as expense his actual costs under an accountable plan, then?" Yes, correct! Thanks for replying 🙂