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Old 07-23-2012, 05:32 PM
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Join Date: Jul 2012
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Company Car Abroad

Hello,
We are a small business (S-Corp) in the United States that would like to purchase a used vehicle for use in Costa Rica. The title would be transferred to the company and the company would pay for comprehensive insurance. The employee would use the vehicle for both personal and business use and track mileage for both. Can the company claim regular deductions for mileage, depreciation and expenses? Does it matter if the car is driven domestically or internationally?
Thank you!



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Old 07-23-2012, 09:00 PM
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Join Date: Oct 2010
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“Can the company claim regular deductions for mileage, depreciation and expenses? “--->To be deductible, The cost of operating a car, truck or other vehicle is tax-deductible when driving for business purposes,a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.


“Does it matter if the car is driven domestically or internationally?”--->I do not think so . Since the S Corporation owns the vehicle,the deduction to the S Corp is based on actual operating expenses. The corporation is also limited by the business-use percentage of the vehicle.The corporation can, however, deduct all of the operating expenses of the vehicle without regard to the business-use percentage, if the personal-use percentage is treated as income to the employee. The corporation's deduction for the personal-use percentage should be treated as a compensation expense. (This is essentially what you have done, except you have not counted the 10% personal use as compensation)



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