I called IRS last night asking: On what form should I list the standard deduction (0.485 cents per mile) for vehicles I used, part-time, for my LLC. I thought this would be a no brainer. After waiting 20 minutes, the IRS agent could not answer. She put me on hold wanting to connect me to another IRS center. After another 20+ minutes of waiting I hung up.
I’ve had 3 answers from various sources: 1) Page 2 of form 4562, 2) Page 2 of form 8582 (my accountant did it as a passive loss couple of years ago), 3) on Schedule A subject to a 2% loss limitation. I know answer 3 is wrong since I have an LLC.
So where do you guys list yours?
depends on how you tax the LLC.
If it’s a disregarded entity, it goes on whatever form the business goes on. Rentals on Sch E, flips on Sch C, etc.
If it’s being taxed seperately you can treat it as an unreimbursed employee expense (Sch A).
Ideally, you would submit an expense report to the LLC for reimbursement and it becomes a company expense (and provides you with tax free cash from the company). It also avoids the appearance of comingling and “where to put it” becomes a non-issue.
Keeping business seperate from personal usually results in the simplest answer (and keeps you out of comingling trouble, too).
Mark,
Thanks for the info. I’ve never heard of a disregarded entity. I’ve set up my LLC as a partnership and I use TaxCut. Basically, everything shows up on 1065 which flows through to my personal. I keep all business expenses separate from personal.
So are you saying that for mileage I should also submit an expense report to the LLC? That’s a good idea. All the years I had accountants doing it they never suggested that. As mentioned before they added a line to form 8582. I have closed the books for 2007 so am reluctant to reimburse. Do you think adding an auto expense line to 8582 would be wrong?
I set up a formal “accountable plan” for my LLC. This allows reimbursement of business expenses from the LLC as a tax deduction without it becoming taxable income to the recipient. There are rules and paperwork that must be followed, but once set up it is actually pretty simple.
One of the benefits of this is to avoid the federal and state base limits (2% fed and ?? state) for unreimbursed employee expenses ( as part of miscellaneous deductions) such as mileage, travel, meals, and others.
For example, if you made $100K, you would need over $2K in miscellaneous deductions before you would actually see any deduction, and then only that amount of misc expenses that exceed the base limit of $2k. Using an accountable plan allows the full amount to be deducted as it flows from your business to your personal, depending on how you selected the form of your business.
jmd_forest
“closed the books” sounds like you’re using quickbooks or something. just “open them” back up.
I would suggest that you submit an expense report for 2007, treat it as an expense/account payable on the partnerships books, and write yourself a check in 2008 to clear the payable.
Or, submit an expense report and treat it as 2008 expense for the partnership. doesn’t benefit you this year, but…
no point wasting it with the 2% floor on Sch A.
“Or, submit an expense report and treat it as 2008 expense for the partnership. doesn’t benefit you this year, but…”
I think that’s what I’m going to do…
Thanks for the help.