A person owns and operates CCorp and llc partn. The CCorp was used to purchase a vehicle for the LLC since it has business credit. who gets the depreciation write-off?
If someone owns 2 businesses. One a c Corp and the other a llc partnership. The business credit of the c Corp was used to purchase a vehicle for the LLC. So the vehicle is in the c Corp name, and the owners name, both are responsible for the vehicle loan. The LLC uses the vehicle 100% no personal us of vehicle truck). The c Corp doesn't use the vehicle. The LLC pays the loan and vehicle repairs and maintenance. Does the c Corp get the depreciation? since the vehicle is in its name and the LLC recorded the actual expenses paid and not the depreciation? Or does the c Corp not report and depreciation?
Agreed with @Pete_Mc . If it's on the C-corp's books, then certainly only it can book depreciation. It gets tricky though because the C-corp is now incurring an expense unrelated to its operations, therefore, reducing its taxable income. And, if the LLC is paying down the loan for the C-corp, the C-corp will need to record income equal to the principal reduction. There's no free lunch.
IMO, the proper way to handle this is for the C-corp to service the debt and book the depreciation and have the LLC lease the truck from the C-corp. That way, the LLC is recording expenses for the lease payments and repairs/maintenance and the C-corp is recording income to offset the depreciation, interest expense, and loan principal reduction. This scenario clearly reflects income for both entities and that's what the IRS likes to see.