Since my vehicle is personally owned personally, do I have to show costs paid as employee income and is it taxable?
First, the loan that is due to the shareholde--or in this case due to you--will have to accrue interest. That interest is due to you and the corporation needs to issue a 1099-INT for any interest that accrues and is paid to the debt holder (you) which exceeds $10.
Secondly, you need to transfer title of the vehicle to the business if you haven't already done so.
Thirdly, given the limited information, it is very difficult for me to provide you with an exact answer regarding the tax deduction amount for your vehicle. However, I will provide general guidance regarding start-up costs and tax deductions.
Generally speaking, business start-up costs prior to incorporation can be deducted up to $5,000. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized.
So, in your case, if the vehicle is in fact used solely for business purposes it would appear as though you would be able to deduct those start-up costs up to $5,000 in the year incurred. Any amount of costs thereafter would be amortized. Vehicle amortization can vary so I would need more information to provide further detail.
Good luck with the new venture and let us know if you have any more tax questions.
Ryan Himmel, CPA and registered securities analyst, is the founder and CEO of BIDaWIZ.com, a professional network for small businesses and entrepreneurs to obtain trusted advice and services from a team of CPAs, Enrolled Agents, Financial Planners & Tax Attorneys. His team provides answers to the many finance and tax questions that small businesses encounter every day. Ryan has been quoted in The Wall Street Journal, Forbes, Fox Business and Crain's New York, among other publications. Ryan also regularly contributes to the community with his finance and tax blog.