Just created a S corp and what to do with my tractor?

alia176 · Feb 18, 2016

LD1 said:
The lease is an expense on the business. But an income on your personal stuff. Tax stuff is way more complicated than it needs to be, which is why its best to let a pro do your taxes when they start getting more complex like this. But on the surface, whatever your business pays YOU, I would think you need to claim as personal income. Then since the tractor is your "personal" tractor, on your personal taxes since you will be claiming income from the business for the tractor, you can deduct expenses and depreciation.

Ahh, that makes sense. It's an expense for the business but an income for me personally. So, I'll play the game to see where the tipping point is, gotcha.

jenkinsph · Feb 18, 2016

alia176 said:
Ahh, that makes sense. It's an expense for the business but an income for me personally. So, I'll play the game to see where the tipping point is, gotcha.

If you have not thought through this before LD1 explained this to you then get a good accountant. This is their business and you need their expertise. Stick to engineering and let the accountants do their job.

Dead Horse · Feb 20, 2016

davesl708 said:
You are correct. The lease is an expense.

An expense to the business........ the depreciation is taken as a tax deduction by the owner of the equipment. IE you. you fill out a schedule D IIRC listing all the expenses and Income associated with owning the tractor and renting it to the business. All these tax schedules are consolidates on your 1040.

nikerret · Feb 21, 2016

Great thread! i'm thinking of doing something similar, but I'm keeping my W2 job and just doing this part time and as a sole proprietorship. If I make some serious money, I'll become an LLC, but that'll be decided at the end of this year.

alia176 · Feb 22, 2016

This is a great thread and very educational. I hope it will help out others as well.

In some ways it makes sense for me to transfer the ownership to the S corp so that I can write off all expenses related to the tractor. If I were to rent it to the S corp, the additional income on my personal taxes may not be ideal. I don't know if I can accrue enough tractor related expenses to reduce that personal income. Local rental places who rent out smaller tractor/backhoe charges $1800-$2000/monthly

Anyway, I'll discuss it with my CPA lady.