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Federal Tax Credit for business but title not under business name

Discussion in 'Off Topic' started by janelee2, Aug 27, 2015.

  1. janelee2

    janelee2 Member

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    I bought a tesla and was hoping to get a 7500 federal tax credit. I used the car for 50% business for my s corp. However, I realized that when I purchased the car it was purchased under my name only. Can the S corp still take 50% credit for this even though this was used 50% of the time for business? The title is only under my name?
     
  2. spaceballs

    spaceballs Member

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    This is Roadster part of the forums, so there is no 7500 federal tax credit as there is no such thing as new roadster. I would ask your CPA on your question though, and look at title papers and see if your S corp is mentioned at all in them.
     
  3. MikeC

    MikeC Active Member

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    Check with your CPA but I believe you can. I originally bought it under my S corp but had to change it to my own name because of the loan title. I deducted part of it under my name and part under my business, I forget the percentage.
     
  4. janelee2

    janelee2 Member

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    I bought mine originally under my name but I use it 50% for my business. Some people say the title needs to be under your business name too if you want to get the 50% credit?
     
  5. spaceballs

    spaceballs Member

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  6. janelee2

    janelee2 Member

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    oh ok.
    I just want to know if the title of the vehicle is not under the company's name when it was initially purchased, can the business claim credit on it if it was used 50% of the time for business
     
  7. spiderguy

    spiderguy Member

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    Jane, you should be able to use form 8936 to allocate the business portion of the vehicle to your S Corp. I don't believe that the purchase under your name only will impact the tax credit, since there is no matching done. This is addressed on the 2014 IRS Form 8936 instructions, page 4, line 5.

    http://www.irs.gov/pub/irs-pdf/f8936.pdf
     
  8. janelee2

    janelee2 Member

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    Hi Spiderguy,
    But what if the IRS ask for proof of the purchase agreement on the vehicle and they see the vehicle is registered under the individual name and not the business name? Won't they disqualify the credit then?

    - - - Updated - - -

    Because I read this here - http://www.irs.gov/uac/Summary-of-the-Credit-for-Qualified-Hybrid-Vehicles
    It says ". The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle."
    Since the s corp name is not part of the title can the s corp still claim the credit?
     
  9. cpa

    cpa Member

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    Jane,

    As a dude who does this sort of thing for a living, I strongly urge you to contact your professional promptly and determine what you need to do. Since you cannot "unscramble the egg," you are faced with having title in your name and using your car partly for business. With all due respect to the helpful members on this forum, individuals who perform accounting and income tax services for a living and know the labyrinthine laws and regulations are much better qualified to give good advice and offer suggestions or alternatives to minimize your income tax burden while still complying with the law.

    Your situation may not be as cut-and-dried as it seems. Your tax person can ask the right questions and propose what is best for you! Good luck!
     
  10. janelee2

    janelee2 Member

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    Hi I read this link: http://www.irs.gov/uac/Summary-of-the-Credit-for-Qualified-Hybrid-Vehicles and it shows:
    .
    The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.
     
  11. hcsharp

    hcsharp Active Member

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    That's not correct. Especially with an S Corp it's usually better to have your business vehicle in your name. @Spiderguy already answered your question - if you look at Part II of Form 8936 you will see a line that asks for the business allocation. The personal credit is then reduced by the business percent which flows to Form 3800 Business Tax Credits, so you get the whole $7,500 in the end.

    One thing you need regardless of how you do it or who owns the car is a mileage log. You can't just guess at 50% business use (not suggesting you don't have a log). You have to make the allocation based on actual miles driven for your S Corp and miles driven for personal use. If you don't have a log, get one started now and try to re-construct it from when you bought the car. Without a mileage log you get no business deduction, but you still get the full tax credit.

    Mods: can you pls move this to the existing thread on the tax credit. Thank you!
     
  12. janelee2

    janelee2 Member

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    One final question for the s corp i need to be at least shareholder right? If I am 1% shareholder can the s corp still take the 50% credit?
     
  13. hcsharp

    hcsharp Active Member

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    The S Corp doesn't take any credit in the first place. It doesn't even pay any tax.
     
  14. janelee2

    janelee2 Member

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    I know it flows to the shareholders but if I am only 1% shareholder of the s corp and I the corporation use the vehicle which belongs to me 50% of the time can the company take a 50% deduction?
     
  15. hcsharp

    hcsharp Active Member

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    First you were talking about the tax credit. Now you are talking about a deduction, presumably for business use of your personal auto. The deduction and the credit are two very different animals and handled quite differently. There isn't room enough here for me to discuss the deduction especially when the IRS has already published numerous documents discussing this topic.

    WRT the credit, read my last post. I've already answered your question. In fact you can just ignore the business use entirely and you would get the same result (unless you don't have enough tax to use the whole $7,500 in one year, or you have other business credits, in which case it makes a big difference).
     
  16. Helen Lau

    Helen Lau New Member

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    tax credit CA

    I'm confused on the tax credit. Can anything advise whether it's a good idea to have S Corp own it or under personal name? Since S Corp doesn't pay any taxes and everything flows through to personal, how does it take the 7500 credit. And what about the hummer credit? The business have to own the car right? Thanks all in advance.
     

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