Transferring the partly depreciate auto to an S Corporation

I took section 179 deduction proportionate to business use for an auto
almost exclusively used for business during 2004 when I was self
employed. In the middle of 2005 I started an
S corporation. I am not employed by the corporation. Yet I used the
auto as the officer of the corporation almost exclusively for the
business use of the corporation. Should I transfer the cost basis of
the auto as an asset to the S Corporation and depreciate as a line item
through the corporation or should I continue to depreciate through
schedule C as I am still using it for business purposes and I am not
employed by the corporation.
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Assets of an S-Corp are depreciated on the owner's schedule. So, you just continue to depreciate the asset on your return (short and uncomplicated version).
I think the bigger question is, how can you be an officer of the (S) corporation using the vehicle exclusively for business and not be an employee? Owners with any active participation are required to take reasonable salaries, and are therefore employees. This is so that owners would not just work and declare all income as corporate income (not subect to SI tax).
If someone helped you convert a sole proprietership to an S-Corp and then told you not to be an employee with wages, even though you are actively participating, you have received some bad advice. Only passive owners of an S-Corp would not be conisdered employees. So, by stating that your personal vehicle is used by you exclusively for business, indicates that you are more than a passive owner. If you ever went through an audit, this would be a serious issue. However, what is a reasonable salary is a little more subjective.
You should get some professional advice on this.. Anyone else?
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I was not sure on not being an employee when I was about to start the corporation as well. So, I did go to the local chamber with my business plan and discussed with a retired CPA arranged through SBA. Since, my investment is not that big, and intially I might not get any income out of it, I just wanted to make sure the corporation has some money left to run the day to day oeprations instead of draining all the capital in salaries. He said, it should be okay if it doesn't hire any employees. So, I thought I can treat all the work as sweat equity instead of taking salary for it and leave whatever little the corporation makes in the intial period in the corporation itself so it has some more capital. Is that okay?
Reply to
If you are an S-Corp, you are the corporation, so there is no leaving it in the corporation. All profits are passed on to the shareholders. If the amount is immaterial and/or there is no income, then you could probably get away with that? But I am not sure as I don't do tax work.
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