Question for a tax attorney or a CPA…?
Sunday, January 3rd, 2010 at
1:41 am
I am the owner of two vehicles. My fiance uses one of them for work (he is a self-employed musician) and pays for all maintenance, gas, insurance and repairs on this particular vehicle. But as I stated previously, the car is in my name. For the past several tax years, my fiance has declared the car’s mileage, gas, tolls, and repairs for deductions on his tax returns. What are the implications/liabilites drugs without prescription of this arrangement as far as an audit would be concerned? Is there anything that we can do, short of signing the car over to my fiance, to legitimize this arrangement, or do we even need to do so? I would appreciate the opinion of anyone who is knowlegeable of tax laws. Thanks!
If you use a vehicle to generate income, you are allowed to recover the cost of that asset over its useful life. You can recover its cost by either taking a flat mileage rate, or depreciation.
But if you do not own the car, even though you use it for business purposes, you cannot recover the cost of the vehicle.
If your fiance’s tax returns are examined, the mileage he has taken will be disallowed. Out of pocket expenses he has for the operation of the vehicle, such as gas, parking, tolls, may be allowed.
He could not have an insurance policy on a car he does not own, so I don’t see how he could pay for insurance. If he gives you money for insurance, he cannot deduct it.
If he increases the value or useful life of the car by paying for repairs, that benefits you since you could sell the car for the increased value. No deduction for him for this either.
Sorry, unless he has title to the car he cannot deduct anything except his out of pocket operating expenses while he is using your car.
No, you don’t need to do so. If they are legitimate business expenses, and you have receipts and/or mileage logs, it doesn’t matter what "name" the car is in.
Either marry the dude or dump him. He’s using you and won’t get the deduction and he’s wearing out your car.
I am not a tax attorney or a CPA, but I think there should not be any problem with this arrangement. Your fiance can deduct the car business expenses. No where in IRS publications it says that you must be the owner of the car. It does use the word "your car." So it can be your own (in your name), borrowed, leased or your family car.
This is also from IRS publications "If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible car expense." So it is not necessary that you own the car.