Hello All,
I wanted to run an entry past you guys to ensure I have accounted for it properly on the books and for taxes. All input is appreciated.
2022 S-Corp 100% owner purchases a business vehicle for S-Corp that they will also be used to some extent in another wholly owned company of theirs but will be 100% business use between the two companies. Owner wanted to trade personal vehicle toward purchase. Prior years the companies paid mileage to owner for business use (as entry to expense and reduction of draws). S corp purchased vehicle from owner at the trade in value and then traded it for business vehicle with GVWR of 6035-6300lbs. No depreciation had been taken in prior years on the personal vehicle for which mileage was paid. I do not know if the "mileage" was reported as income on the personal return (should it have been?).
Vehicle Price $61,000.00
1 Yr connect & Protect 700.00
Nitrogen 175.00
Window Tint 600.00
Selling Price $62,475.00
Less Trade 9,500.00
Taxable total $52,975.00
Sales Tax 4,396.93
Tire Disposal 5.00
Doc Fee 500.00
License/Reg/Transfer 875.00
Drive train warranty 999.00 72 months/100,000 miles
service contract 4,558.00 72 months/100,000 miles
Total Due 64,308.93 amount of check written to dealership
Entries: DR CR
Vehicles (asset) 9,500.00 purchase by company
Checking 9,500.00 recorded by check written
Prepaid Exp 999.00 warranty
Prepaid Exp 4,558.00 service contract
Prepaid Exp 758.10 1yr connect & protect plus tax
Office Exp 500.00 Doc Fee
Vehicle Exp 194.53 Tire Disposal + Nitrogen (plus tax)
Licenses/Registrations 875.00
Vehicle asset 56,424.30
Checking $64,308.93
Total in Vehicle Asset account $65,924.30 (61,600+5112.8 ST - 788.50 ST on trade)
No gain or loss on trade
Then expense one month for each of the three prepaid expenses.
Then for taxes - $27,000 section 179 and remained expensed through bonus depreciation for 100% deduction.
Does this all look correct?
Thanks for your help
