S Corp reimbursement of expenses

Mar 13, 2008 1 Replies

S Corp with 2 unrelated taxpayers. Corp has been reimbursing milage on an accountable plan at the current fed mileage rate. One shareholder purchased a new car this year that was used 40% for business. Actual expenses are $2,000 over the milage rate, but taxpayer loses those because of the 2% floor on misc. deductions.



Q: Can the corporation up the reimbursement to cover "actual" expenses, either by increasing the reimbursement rate to that stockholder or both stockholders, or by having the stockholder account to the corporation the "actual" expenses as total costs x business use while still keeping it as an accountable plan?



Thanks,


Yes, just as long as the plan is amended properly and adopted/passed by the board of directors. But just be sure it's fair to both.

Now the stockholder with 2000$ more than covered under mileage rate, does that include depreciation? And if so, is the car Listed property? Is it a luxury car? These factors might have a bearing as to limited deductions for him.

ChEAr$, Harlan Lunsford, EA n LA

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