tax question,, my wife owns a day-spa that is Incorporated?

Question

she wants to write off her ford excursion, she doesnt use it for business, she does massage and cuts hair all day, i told her she cant write it off, she says because there is advertising on it then she can,, the advertising is on the back license plate frame with the company name and phone number, is this legal

but if i work at walmart and have a car at home can i write that car off

the corp does not own the car, its titled and reg in her name

Answer 1

Hello, ret! You are correct and your wife is incorrect, unless the Excursion is genuinely a business-use vehicle. The IRS is clear (see Pub. 463, linked below) that merely putting advertising materials on a vehicle does NOT qualify the vehicle for any business deductions; it must be a legitimate business asset.

If she wants any business writeoff for the vehicle, she will need to either transfer the vehicle to the corporation (as a capital contribution or as a sale) and treat it as a business asset (in which case personal use would be subject to fringe benefit rules), or she will have to keep a strict mileage log of all business miles and submit Form 2106 (Employee Business Expense) with her 1040 to claim the mileage as an itemized deduction.

Answer 2

If your wife is self-employed and owns a S corporation, she can deduct mileage driving to and from work . If she drives the Ford to work or if she drives something else doesn't matter, whatever she drives to work is being used in her business.
If she drives anything to buy supplies for her business, she is using the vehicle in her business..

She has to keep a daily log of miles driven to work and back home or driven anywhere that is related to the operation of her business. From this she can figure the total mileage for her business each year. She can then use the mileage as a deduction in her corporation without a lot of paper work and figuring the % of business use, etc.
The mileage rate for 2006 is 44 1/2 cents per mile ($0.445) and for 2007 will be 48.5 cents per mile. This is for business mileage and goes on form 1120S on line 19.

A person that works for wages, is not self-employed, (like working at Wal-Mart) cannot deduct mileage to go to and from work.
The standard mileage deduction includes the gas, oil , depreciation, upkeep, etc of a vehicle. Can do one or the other but not both, can not depreciate the cost of a vehicle and claim mileage too.

If her corporation owned the Ford or any other vehicle, it could be depreciated and the business portion of use could be deducted as an expense, but this would involve much more complicated process than taking a mileage deduction for business use of a vehicle.

Answer 3

What you are saying is her business use is about 0%.
Math-wise, whatever the calculated depreciation times 0% is going to equal 0.

She'd have to actually be using it for the business (and in the business' name too, like Mr. Tax P said) to substantiate the deduction.

Answer 4

Since her business use is 0%, she gets that much for a busniess expense. $0

She can take an advertising expense for the cost of any advertising materials displayed on her personal vehicle, or anywhere else for that matter.

Answer 5

If her spa has an EIN number she can list it as a business expense purchase. If she is a sole proprietor and uses her own social it is a little more tricky. If she needed it to drive to work, she can list a certain percent. Use H&R online for like 10 bucks and they list every option she can take including advertising. (no I don't work for H&R)

Answer 6

Generally she can write it off. Especially if there is another vehicle available in the home for use in non working hours. That's sort of the key. The advertising helps as well. Dont forget, she drives to and from work in it and uses it to pick up products and the like. Go for it.