Tax Guru – Ker$tetter Letter

Q:

Subject: new truck

 

Kerry, My son turns 16 this winter.  I’m buying him a 2001 pickup.  I believe we hold our 2 vehicles in the company and pay most of their expense (gas, ins)  out of the company.  How should i buy his truck.  would it benefit me to put him on the payroll in some labor capacity?  looking for your input.

thanks

A:

I can only address this from the tax perspective.  You should also consult with your insurance agent because there are special rules and benefits for teen-age drivers that may influence your decision here.

For tax purposes, it depends on how many miles the truck will be used for business usage.  If most of the miles will be business related, the corp can own it and pay the expenses, and any purely personal miles will have to be shown as income to your son.

If most of the miles will be personal, it will be easier to own it personally and reimburse your son for any business miles driven.

Good luck.  I hope this helps.  

Kerry