{"id":14112,"date":"2023-11-03T13:35:33","date_gmt":"2023-11-03T19:35:33","guid":{"rendered":"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/"},"modified":"2026-01-26T17:10:58","modified_gmt":"2026-01-26T17:10:58","slug":"you-own-the-automobile-lease-back-to-your-company","status":"publish","type":"epkb_post_type_1","link":"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/","title":{"rendered":"You Own the Automobile, Lease Back to Your Company"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 ez-toc-wrap-right counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table Of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Taxpayers_Comprehensive_Guide_to_LLCs_and_S_Corps_2025_Edition\" >Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Talk_to_a_Small_Business_CPA_About_Your_Situation\" >Talk to a Small Business CPA About Your Situation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Schedule_Discovery_Meeting_Now\" >Schedule Discovery Meeting Now<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#What_is_a_self-rental\" >What is a self-rental?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Why_would_I_do_this\" >Why would I do this?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Does_this_help_the_S_Corps\" >Does this help the S Corps?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Whats_the_break-even_mileage\" >What\u2019s the break-even mileage?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Can_I_deduct_depreciation_and_lease_payments\" >Can I deduct depreciation and lease payments?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Whats_the_biggest_risk\" >What\u2019s the biggest risk?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Does_the_tax_rate_affect_the_break-even\" >Does the tax rate affect the break-even?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#What_if_I_own_several_vehicles_or_equipment\" >What if I own several vehicles or equipment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#How_do_I_defend_the_lease_rate\" >How do I defend the lease rate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/#Can_WCG_check_if_this_works_for_me\" >Can WCG check if this works for me?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text css=&#8221;&#8221; woodmart_inline=&#8221;no&#8221; text_larger=&#8221;no&#8221;]By <strong>Jason Watson, CPA<\/strong><br \/>\nPosted Saturday, November 4, 2023<\/p>\n<div class=\"overview\">\n<h2><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span>Key Takeaways<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Leasing a personally owned car back to your business\u00a0creates a self-rental arrangement.<\/li>\n<li>This setup can reduce self-employment taxes in LLCs and partnerships more than in S Corps.<\/li>\n<li>The tax benefit depends heavily on mileage \u2014 below roughly 11,875 miles for a small sedan, leasing can beat the IRS mileage deduction.<\/li>\n<li>High mileage usually favors the standard mileage deduction, while low mileage may favor leasing.<\/li>\n<li>Depreciation and financing costs cannot be double-counted if the vehicle is leased back.<\/li>\n<li>Determining a fair lease rate is tricky and must align with market rates to withstand IRS scrutiny.<\/li>\n<li>The arrangement offers limited value for a single car but may work well with fleets or other equipment.<\/li>\n<li>Estimating actual operating costs and mileage accurately is critical to avoid mistakes.<\/li>\n<li>Overall, lease-backs can be useful in specific situations but are not always more advantageous than simpler options.<\/li>\n<\/ul>\n<\/div>\n<p>This might take a bit of getting used to so we will start with a similar situation. If you owned and operated a landscaping business, you might own the heavy equipment personally, and lease it back to the business. This is very common, and is considered a self-rental. Please refer to Chapter 3 (Three Types of Income) to refresh yourself on self-rentals and the handling of the income. As you know, self-rentals are perfectly fine as long as the lease rates being charged are considered market rates and cannot be considered remuneration of services provided (i.e., owner compensation).<\/p>\n<p>The same thing can be accomplished with your automobile. You would lease a car that you own back to your company. This is <strong><u>not<\/u><\/strong> considered the same as the company leasing the car from a dealer. This is creating a self-rental arrangement between you and your business. And why would you want to do that?<\/p>\n<p>The usual reason- it might prove to be a better tax position since you are reducing the income of your LLC which is subjected to self-employment taxes. Since we also use the ability to pay salaries as one of components in determining a reasonable salary for you as a shareholder in an S Corp, the leaseback option might influence a small reduction in your salary.<\/p>\n<p>The income tax angle is a wash. A big table is coming up. First, let\u2019s talk about some basic assumptions.<\/p>\n<p>Keep in mind- this arrangement will benefit an LLC through the reduction of self-employment taxes much more than an S corporation. You might be asking why not just elect S corporation status to solve your SE tax troubles? Perhaps your LLC is not generating the $35,000 in net business income after expenses to warrant the S Corp election.<\/p>\n<p>Every year, AAA publishes the annual cost of driving an automobile, and the costs are broken down by small sedan, medium sedan, large sedan, sport utility vehicle and a minivan. From there, costs are established for 10,000 miles, 15,000 miles and 20,000 miles.<\/p>\n<p>Small sedans are Chevy Cruze, Ford Focus, Honda Civic, Hyundai Elantra and Toyota Corolla. Medium sedans are Chevy Impala, Ford Fusion, Honda Accord, Nissan Altima and Toyota Camry. No numbers for a Porsche 911. Sorry. We\u2019re sure the operating costs aren\u2019t too bad, and we\u2019ve recently heard that 911s never depreciate and the service checks are free.<\/p>\n<p>There are certain fixed costs such as insurance, registrations and financing. There are certain variable expenses such as gas, tires and maintenance. Then there are some quasi-variable expenses, namely depreciation. Depreciation accelerates as the mileage per year increases. Think about Kelly Blue Book, Edmund\u2019s or lease rates- the reduction in value due to mileage gets more severe as the mileage exceeds 15,000. Sort of a curvilinear equation.<\/p>\n<p>The lease rate needs some discussion too. If you have a newer, more expensive automobile, you might be able to fetch $600 per month. If you have an older car or a car that is more economical, a market lease rate might be $400. It a challenge to determine the market rate. Is it the rate a rental car agency would charge such as Hertz or Avis? Is it the rate a dealer would charge? Something in the middle? Don\u2019t forget the <a href=\"https:\/\/www.irs.gov\/publications\/p15b\/\" target=\"_blank\" rel=\"noopener\">IRS Publication 15-B (Employer\u2019s Tax Guide to Fringe Benefits)<\/a> where the lease value is determined by the IRS based on the value of the car. The benefit of ambiguity is the ability to pitch an argument on most numbers.<\/p>\n<p>More tables. More numbers. Yes, tables are only meaningful to the table designer yet consider the following in a non S Corp situation-<\/p>\n<table style=\"width: 100%;\">\n<tbody>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Business Miles<\/td>\n<td style=\"text-align: center; width: 10%;\"><strong>5,000<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><strong>10,000<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><strong>11,875<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><strong>15,000<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><strong>20,000<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Personal Miles<\/td>\n<td style=\"text-align: center; width: 10%;\">5,000<\/td>\n<td style=\"text-align: center; width: 10%;\">5,000<\/td>\n<td style=\"text-align: center; width: 10%;\">5,000<\/td>\n<td style=\"text-align: center; width: 10%;\">5,000<\/td>\n<td style=\"text-align: center; width: 10%;\">5,000<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Total Miles<\/td>\n<td style=\"text-align: center; width: 10%;\">10,000<\/td>\n<td style=\"text-align: center; width: 10%;\">15,000<\/td>\n<td style=\"text-align: center; width: 10%;\">16,875<\/td>\n<td style=\"text-align: center; width: 10%;\">20,000<\/td>\n<td style=\"text-align: center; width: 10%;\">25,000<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">AAA 2014 Costs for Small Sedan<\/td>\n<td style=\"text-align: center; width: 10%;\">0.597<\/td>\n<td style=\"text-align: center; width: 10%;\">0.464<\/td>\n<td style=\"text-align: center; width: 10%;\">0.440<\/td>\n<td style=\"text-align: center; width: 10%;\">0.397<\/td>\n<td style=\"text-align: center; width: 10%;\">0.360<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">less Depreciation, Finance<\/td>\n<td style=\"text-align: center; width: 10%;\">0.288<\/td>\n<td style=\"text-align: center; width: 10%;\">0.204<\/td>\n<td style=\"text-align: center; width: 10%;\">0.181<\/td>\n<td style=\"text-align: center; width: 10%;\">0.161<\/td>\n<td style=\"text-align: center; width: 10%;\">0.106<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Actual Operating Costs<\/td>\n<td style=\"text-align: center; width: 10%;\">0.309<\/td>\n<td style=\"text-align: center; width: 10%;\">0.260<\/td>\n<td style=\"text-align: center; width: 10%;\">0.259<\/td>\n<td style=\"text-align: center; width: 10%;\">0.236<\/td>\n<td style=\"text-align: center; width: 10%;\">0.254<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><strong>Mileage Rate Method<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">2015 IRS Mileage Rate<\/td>\n<td style=\"text-align: center; width: 10%;\">0.575<\/td>\n<td style=\"text-align: center; width: 10%;\">0.575<\/td>\n<td style=\"text-align: center; width: 10%;\">0.575<\/td>\n<td style=\"text-align: center; width: 10%;\">0.575<\/td>\n<td style=\"text-align: center; width: 10%;\">0.575<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Mileage Deduction on Sched C<\/td>\n<td style=\"text-align: center; width: 10%;\">2,875<\/td>\n<td style=\"text-align: center; width: 10%;\">5,750<\/td>\n<td style=\"text-align: center; width: 10%;\">6,828<\/td>\n<td style=\"text-align: center; width: 10%;\">8,625<\/td>\n<td style=\"text-align: center; width: 10%;\">11,500<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Savings of SE Tax<\/td>\n<td style=\"text-align: center; width: 10%;\">406<\/td>\n<td style=\"text-align: center; width: 10%;\">812<\/td>\n<td style=\"text-align: center; width: 10%;\">965<\/td>\n<td style=\"text-align: center; width: 10%;\">1,219<\/td>\n<td style=\"text-align: center; width: 10%;\">1,625<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Savings of Income Tax @25% MFJ<\/td>\n<td style=\"text-align: center; width: 10%;\">719<\/td>\n<td style=\"text-align: center; width: 10%;\">1,438<\/td>\n<td style=\"text-align: center; width: 10%;\">1,707<\/td>\n<td style=\"text-align: center; width: 10%;\">2,156<\/td>\n<td style=\"text-align: center; width: 10%;\">2,875<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Total Savings Using Mileage Reimbursement<\/td>\n<td style=\"text-align: center; width: 10%;\">1,125<\/td>\n<td style=\"text-align: center; width: 10%;\">2,250<\/td>\n<td style=\"text-align: center; width: 10%;\">2,672<\/td>\n<td style=\"text-align: center; width: 10%;\">3,375<\/td>\n<td style=\"text-align: center; width: 10%;\">4,500<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><strong>Lease Method<\/strong><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Annual Lease @ $400\/month<\/td>\n<td style=\"text-align: center; width: 10%;\">4,800<\/td>\n<td style=\"text-align: center; width: 10%;\">4,800<\/td>\n<td style=\"text-align: center; width: 10%;\">4,800<\/td>\n<td style=\"text-align: center; width: 10%;\">4,800<\/td>\n<td style=\"text-align: center; width: 10%;\">4,800<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">less Depreciation ($3,160 Year 1)<\/td>\n<td style=\"text-align: center; width: 10%;\">-3,160<\/td>\n<td style=\"text-align: center; width: 10%;\">-3,160<\/td>\n<td style=\"text-align: center; width: 10%;\">-3,160<\/td>\n<td style=\"text-align: center; width: 10%;\">-3,160<\/td>\n<td style=\"text-align: center; width: 10%;\">-3,160<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Biz Use Expenses Using Actual Costs<\/td>\n<td style=\"text-align: center; width: 10%;\">1,545<\/td>\n<td style=\"text-align: center; width: 10%;\">2,603<\/td>\n<td style=\"text-align: center; width: 10%;\">3,075<\/td>\n<td style=\"text-align: center; width: 10%;\">3,544<\/td>\n<td style=\"text-align: center; width: 10%;\">5,076<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Savings of SE Tax<\/td>\n<td style=\"text-align: center; width: 10%;\">897<\/td>\n<td style=\"text-align: center; width: 10%;\">1,046<\/td>\n<td style=\"text-align: center; width: 10%;\">1,113<\/td>\n<td style=\"text-align: center; width: 10%;\">1,179<\/td>\n<td style=\"text-align: center; width: 10%;\">1,395<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Savings of Income Tax @25% MFJ<\/td>\n<td style=\"text-align: center; width: 10%;\">1,586<\/td>\n<td style=\"text-align: center; width: 10%;\">1,851<\/td>\n<td style=\"text-align: center; width: 10%;\">1,969<\/td>\n<td style=\"text-align: center; width: 10%;\">2,086<\/td>\n<td style=\"text-align: center; width: 10%;\">2,469<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Gain on Net Rental Income @25% MFJ<\/td>\n<td style=\"text-align: center; width: 10%;\">410<\/td>\n<td style=\"text-align: center; width: 10%;\">410<\/td>\n<td style=\"text-align: center; width: 10%;\">410<\/td>\n<td style=\"text-align: center; width: 10%;\">410<\/td>\n<td style=\"text-align: center; width: 10%;\">410<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Total Savings Using Lease Back Option<\/td>\n<td style=\"text-align: center; width: 10%;\">2,073<\/td>\n<td style=\"text-align: center; width: 10%;\">2,487<\/td>\n<td style=\"text-align: center; width: 10%;\">2,672<\/td>\n<td style=\"text-align: center; width: 10%;\">2,855<\/td>\n<td style=\"text-align: center; width: 10%;\">3,454<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<td style=\"text-align: center; width: 10%;\"><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: left; width: 50%;\">Delta on Mileage Rate Method<\/td>\n<td style=\"text-align: center; width: 10%;\"><span style=\"color: #0000ff;\"><strong>-948<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 10%;\"><span style=\"color: #0000ff;\"><strong>-237<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 10%;\"><span style=\"color: #0000ff;\"><strong>0<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 10%;\"><span style=\"color: #0000ff;\"><strong>520<\/strong><\/span><\/td>\n<td style=\"text-align: center; width: 10%;\"><span style=\"color: #0000ff;\"><strong>1,045<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Tilt!<\/p>\n<p>We haven\u2019t updated this for 2021 numbers. Out of our client base of 2,700, we only have one business doing this. Have some fun with this, but in the end the other scenarios won\u2019t hurt the brain as much.<\/p>\n<p>The first question is the break-even. That number is 11,875 miles for a small sedan. That means if you drive fewer miles, then a lease arrangement might be a good idea. Conversely, if you drive more miles than 11,875, then using the mileage rate deduction is better. Yes, this is a middle of the road number. Pun intended.<\/p>\n<p>Second question is depreciation and finance. Since you are charging a lease to your business for the use of the automobile, you cannot also add depreciation and finance charges. Those figures make up a large part of AAA\u2019s cost of ownership. You can only pass operational costs proportioned to business use. However, those expenses might be deducted on Schedule E of your individual tax returns, similar to rental properties.<\/p>\n<p>How does the break-even move around? Good question. Frankly, AAA tends to be heavy-handed on the costs. So, if the average costs to operate an automobile go down or is less than what the AAA thinks, the break-even point decreases. If the market lease rate increases from the $400 used above, the break-even mileage increases.<\/p>\n<p>In other words, as the mileage increases, you are amortizing the same fixed costs across more miles, whereas the IRS is giving you a flat rate of 57.5 cents for the 2015 tax year. Low miles? Lease arrangement might make sense since the mileage rate is lower than the actual costs. High miles? Your actual costs are being spread thinner, but the IRS still gives you 57.5 cents. Things to consider.<\/p>\n<p>How does this arrangement reduce my self-employment taxes? Wow. Another good question- you are full of them. Leasing a car back to your business has the most benefit in the garden variety LLC or partnership where all the income is being subjected to self-employment taxes. As you know, an S Corp already sanitizes a bunch of income in the form of a K-1 which is not subjected to self-employment taxes.<\/p>\n<p>So, to reduce your K-1 income in favor of non-passive self-rental income is basically moving money from your right pocket to your left pocket. Both income sources are only taxed at the income tax level. Net zero. But we\u2019ve already discussed that reducing S corporation income through self-rentals might help reduce your reasonable salary. However, this is more apparent in self-rentals or lease arrangements that are not automobiles. The reimbursement allowances, depreciation limits and business use calculations on automobiles versus other self-rental items makes it less lucrative.<\/p>\n<p>Conversely, in an LLC or partnership where self-employment tax is a concern, the automobile lease arrangement is a business expense and directly reduces the income, and therefore reduces self-employment taxes. This arrangement might be a good idea if you are unable to use an S Corp election (foreign investor) or if it doesn\u2019t make sense to (below break-even income).<\/p>\n<p>There is some danger with the lease back to your business option. The biggest challenge is estimating the actual costs to operate your automobile, and the second challenge is estimating your mileage. So, if you are close to the break-even point it might not make sense. And engaging in revisionist history is not an ideal situation either.<\/p>\n<p>Some more commentary. The AAA rate is published each year by the American Automobile Association and takes into account fuel prices, average insurance, registrations, etc.<\/p>\n<p>The previous table assumes a 25% marginal tax rate. This is not a huge consideration, but as marginal tax rates increase the break-even point decreases. For example, on a small sedan, a jump from 25% to 32% in marginal tax rate increases your savings by $400 annually for a person who drives 15,000 miles for business and elects to use the mileage deduction and not the lease arrangement.<\/p>\n<p>Medium sedans. With a slight increase in operating costs and subsequent market lease rates, the break-even is about 13,000 miles. Again, that might be low to some business owners. Hassle versus reward.<\/p>\n<p>What is the net-net?<\/p>\n<ul>\n<li>The lease arrangement seems like an OK idea with low business miles.<\/li>\n<li>It seems exotic. It seems like a cool thing to drop at a party as a genius idea. But in the end, it might not be all that. But looking smart can be better than being smart.<\/li>\n<li>With one vehicle, it only works well in an LLC or partnership where self-employment taxes are being applied to all income.<\/li>\n<li>With several vehicles (fleet) or machinery, lease-backs can prove to be smart tax planning.<\/li>\n<\/ul>\n<p>To confirm, however, WCG can model your specific situation.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space height=&#8221;25px&#8221;][vc_column_text]<style data-type=\"vc_shortcodes-custom-css\">#wd-6915e3dd2a9b5 .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-6915e437409dd .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-6915e437409dd .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68460c16bff16 .info-box-title{line-height:60px;font-size:50px;color:#473d3c;}#wd-68460c16bff16 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b937e0887f .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b937e0887f .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-687b9384e0d51 .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b9384e0d51 .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-687b938a8f4b3 .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-687b938a8f4b3 .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68bcfccd83cf7 .info-box-title{line-height:46px;font-size:36px;color:#473d3c;}#wd-68bcfccd83cf7 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}@media (max-width: 1199px) {#wd-6915e3dd2a9b5 .info-box-title{line-height:34px;font-size:24px;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:24px;font-size:14px;}#wd-6915e437409dd .info-box-title{line-height:34px;font-size:24px;}#wd-6915e437409dd .info-box-inner{line-height:24px;font-size:14px;}#wd-68460c16bff16 .info-box-title{line-height:50px;font-size:40px;}#wd-687b937e0887f .info-box-title{line-height:25px;font-size:15px;}#wd-687b9384e0d51 .info-box-title{line-height:25px;font-size:15px;}#wd-687b938a8f4b3 .info-box-title{line-height:25px;font-size:15px;}#wd-68bcf7fc8516a .info-box-title{line-height:34px;font-size:24px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfccd83cf7 .info-box-title{line-height:36px;font-size:26px;}#wd-68bcfccd83cf7 .info-box-inner{line-height:24px;font-size:14px;}}@media (max-width: 767px) {#wd-6915e3dd2a9b5 .info-box-title{line-height:28px;font-size:18px;}#wd-6915e3dd2a9b5 .info-box-inner{line-height:24px;font-size:14px;}#wd-6915e437409dd .info-box-title{line-height:28px;font-size:18px;}#wd-6915e437409dd .info-box-inner{line-height:24px;font-size:14px;}#wd-68460c16bff16 .info-box-title{line-height:40px;font-size:30px;}#wd-687b937e0887f .info-box-title{line-height:24px;font-size:14px;}#wd-687b9384e0d51 .info-box-title{line-height:24px;font-size:14px;}#wd-687b938a8f4b3 .info-box-title{line-height:24px;font-size:14px;}#wd-68bcf7fc8516a .info-box-title{line-height:28px;font-size:18px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfccd83cf7 .info-box-title{line-height:28px;font-size:18px;}#wd-68bcfccd83cf7 .info-box-inner{line-height:24px;font-size:14px;}}<\/style><div class=\"wpb-content-wrapper\">[vc_row][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6915e3dd2a9b5\" class=\" wd-rs-6915e3dd2a9b5 wd-info-box wd-wpb text-center box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p style=\"text-align: center;\"><em>Jason Watson, CPA, is a Partner and the CEO of <strong>WCG CPAs &amp; Advisors<\/strong>, a boutique yet progressive tax, accounting and business consultation firm located in Colorado serving small business owners and taxpayers worldwide.<\/em><\/p>\n<div style=\"display: flex; justify-content: center;\"><a href=\"https:\/\/www.linkedin.com\/in\/jason-watson-cpa\/\"><img decoding=\"async\" class=\"alignnone wp-image-17327 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/linkedin-150x150-1.png.webp\" alt=\"Jason Watson CPA LinkedIn\" \/><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0<a href=\"mailto:jason@wcginc.com\"><img decoding=\"async\" class=\"alignnone size-thumbnail wp-image-17334 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/mail-150x150-1.png.webp\" alt=\"Jason Watson CPA Email\" \/><\/a><\/div>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6915e437409dd\" class=\" wd-rs-6915e437409dd wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title img-right kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-800 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Taxpayers_Comprehensive_Guide_to_LLCs_and_S_Corps_2025_Edition\"><\/span>Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p><img decoding=\"async\" class=\"size-full wp-image-31529 alignnone\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/LLC-S-Corp-Web-and-Social-GFX_275-250x300-1.webp\" alt=\"Taxpayer\u2019s Comprehensive Guide to LLCs and S Corps 2025 Edition\" width=\"250\" height=\"300\" \/>This KB article is an excerpt from our 420+ page book (some picture pages, but no scatch and sniff) which is available in paperback from\u00a0<a href=\"https:\/\/www.wcginc.com\/amazon\" target=\"_blank\" rel=\"noopener\">Amazon<\/a>, as an eBook for\u00a0<a href=\"https:\/\/www.wcginc.com\/kindle\" target=\"_blank\" rel=\"noopener\">Kindle<\/a>\u00a0and as a\u00a0<a href=\"https:\/\/www.wcginc.com\/pdf\" target=\"_blank\" rel=\"noopener\">PDF<\/a>\u00a0from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles online, click on the fancy buttons below or\u00a0<a href=\"https:\/\/wcginc.com\/business-services\/book\/\" target=\"_blank\" rel=\"noopener\">visit our webpage<\/a>\u00a0which provides more information.<\/p>\n<table class=\"purchase-table\">\n<tbody>\n<tr>\n<td style=\"text-align: center;\"><a href=\"\/amazon\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6657 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/amazon-imageresized.png.webp\" alt=\"LLCs and S Corp Book Amazon\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/kindle\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6658\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/kindle-imageresized.png.webp\" alt=\"LLCs and S Corp Book Kindle\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/pdf\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6659 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/PDFresized.png.webp\" alt=\"LLCs and S Corp Book PDF\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong>$49.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$39.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$29.95<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" el_id=\"consultation-secc\" woodmart_css_id=\"6756f7d427735\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzU2ZjdkNDI3NzM1Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460c2ba6365\" class=\" wd-rs-68460c2ba6365 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb-fix \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title box-title-style-default wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Talk_to_a_Small_Business_CPA_About_Your_Situation\"><\/span>Talk to a Small Business CPA About Your Situation<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Please use the form below to tell us a little about yourself, and what you have going on with your small business or 1099 contractor gig. <strong>WCG CPAs &amp; Advisors<\/strong> are small business CPAs, tax professionals and consultants, and we look forward to talking to you!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner el_id=\"consultation-inner\" woodmart_css_id=\"66fd6caf92fc0\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NmZkNmNhZjkyZmMwIiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner][vc_raw_js el_class=\"defaultBot\"]JTNDc2NyaXB0JTIwdHlwZSUzRCUyMnRleHQlMkZqYXZhc2NyaXB0JTIyJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZ3Y2dpbmMuam90Zm9ybS5jb20lMkZqc2Zvcm0lMkYyNTE2NjQ4Nzk0MTQ5NzMlMjIlM0UlM0MlMkZzY3JpcHQlM0U=[\/vc_raw_js][\/vc_column_inner][\/vc_row_inner]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460c16bff16\" class=\" wd-rs-68460c16bff16 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title defaultBot \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>The tax advisors, business consultants and rental property experts at <strong>WCG CPAs &amp; Advisors<\/strong> are not salespeople; we are not putting lipstick on a pig expecting you to love it. Our job remains being professionally detached, giving you information and letting you decide within our ethical guidelines and your risk profiles.<\/p>\n<p>We see far too many crazy schemes and half-baked ideas from attorneys and wealth managers. In some cases, they are good ideas. In most cases, all the entities, layering and mixed ownership is only the illusion of precision. As Chris Rock says, just because you can drive your car with your feet doesn\u2019t make it a good idea. In other words, let\u2019s not automatically convert \u201cyou can\u201d into \u201cyou must.\u201d<\/p>\n<p><strong>Let\u2019s chat so you can be smart about it.<\/strong><\/p>\n<p>We typically schedule a 20-minute complimentary quick chat with one of our Partners or our amazing Senior Tax Professionals to determine if we are a good fit for each other, and how an engagement with our team looks. Tax returns only? Business advisory? Tax strategy and planning? Rental property support?<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner equal_height=\"yes\" el_class=\"boxes--pack\" woodmart_css_id=\"673b5f334f247\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzNiNWYzMzRmMjQ3Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b937e0887f\" class=\" wd-rs-687b937e0887f wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Text-WCG-Offices-1.jpg\" class=\"attachment-full size-full\" alt=\"Text WCG Offices\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Text WCG Offices<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Need to get in touch through a quick text?\u00a0 We\u2019ll respond back within a day and get going!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"sms:+17193452100?&amp;body=Hey%20WCG!%20Please%20call%20me%20to%20discuss%20your%20CPA%20services\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b9384e0d51\" class=\" wd-rs-687b9384e0d51 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-Our-Amazing-Team-1.jpg\" class=\"attachment-full size-full\" alt=\"Chat our amazing team\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Call Our Amazing Team<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p class=\" \">If you need to speak to a tax professional now, give us a call and we'll get you connected.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"tel:719-387-9800\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-687b938a8f4b3\" class=\" wd-rs-687b938a8f4b3 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes nav-button-chat \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-With-a-Tax-Pro-2.jpg\" class=\"attachment-full size-full\" alt=\"Chat with a tax pro\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Chat With a Tax Pro<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Taxes can be tricky. Chat with a WCG human now and get questions answered.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" woodmart_css_id=\"684abef7ecaa9\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2ODRhYmVmN2VjYWE5Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcf7fc8516a\" class=\" wd-rs-68bcf7fc8516a wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Schedule_Discovery_Meeting_Now\"><\/span>Schedule Discovery Meeting Now<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner content_placement=\"middle\" el_class=\"client-review-secs box--card\" woodmart_css_id=\"672e712482714\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzJlNzEyNDgyNzE0Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\" woodmart_css_id=\"671780b35b49a\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBiMzViNDlhIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t<div id=\"wd-68874e76cd7bc\" class=\"wd-image wd-wpb wd-rs-68874e76cd7bc text-left \">\n\t\t\t\n\t\t\t<img decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/265518_2057667071_tax_consultation_300-1.webp\" class=\"attachment-full size-full\" alt=\"Request a Meeting with WCG Inc\" \/>\n\t\t\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"2\/3\" woodmart_css_id=\"671780c0415fb\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBjMDQxNWZiIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcfccd83cf7\" class=\" wd-rs-68bcfccd83cf7 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none with-btn box-btn-static \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Ready to schedule now and talk about S Corp and reasonable salary and all that gibberish? Let's do it! Here is a link to a Discovery Meeting with one of our Partners or Senior Tax Professionals to understand your tax footprint and objectives, and how <strong>WCG CPAs &amp; Advisors<\/strong> might help.<\/p>\n<\/div>\n\n\t\t\t\t\t\t<div class=\"info-btn-wrapper\"><div id=\"wd-6a31c110aa47c\" class=\"  wd-button-wrapper text-left\"><a href=\"https:\/\/calendly.com\/wcg-cpas-advisors\/discovery-meeting-instant\" title=\"\" target=\"_blank\" class=\"btn btn-style-default btn-shape-rectangle btn-size-default\">Schedule Meeting<\/a><\/div><\/div>\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row]<\/div>[\/vc_column_text]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68b5c08ce808f\" class=\" wd-rs-68b5c08ce808f wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title faqs-wrap \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title box-title-style-default wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_a_self-rental\"><\/span>What is a self-rental?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Leasing an asset you personally own \u2014 like a car \u2014 to your own business at a fair market rate.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why_would_I_do_this\"><\/span>Why would I do this?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>To reduce LLC or partnership income subject to self-employment tax.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Does_this_help_the_S_Corps\"><\/span>Does this help the S Corps?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Not much \u2014 S Corps already avoid self-employment tax on K-1 income.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Whats_the_break-even_mileage\"><\/span>What\u2019s the break-even mileage?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Around 11,875 miles for a small sedan; approximately 13,000 miles for medium sedans (figures vary).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Can_I_deduct_depreciation_and_lease_payments\"><\/span>Can I deduct depreciation and lease payments?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>No \u2014 you can only pass operational costs to the business, not both depreciation and financing.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Whats_the_biggest_risk\"><\/span>What\u2019s the biggest risk?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Misjudging your mileage or lease rate and ending up with little to no tax benefit.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Does_the_tax_rate_affect_the_break-even\"><\/span>Does the tax rate affect the break-even?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Yes \u2014 higher tax brackets lower the break-even mileage and increase potential savings.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_if_I_own_several_vehicles_or_equipment\"><\/span>What if I own several vehicles or equipment?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Lease-back arrangements can make more sense for fleets or machinery than for a single car.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How_do_I_defend_the_lease_rate\"><\/span>How do I defend the lease rate?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Use reasonable market comparisons \u2014 rates similar to what a dealer or rental agency would charge.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Can_WCG_check_if_this_works_for_me\"><\/span>Can WCG check if this works for me?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Yes \u2014 they can model your actual numbers to confirm whether leasing back is worthwhile.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>This might take a bit of getting used to so we will start with a similar situation. If you owned and operated a landscaping company, you might own the heavy equipment personally, and lease it back to the company. This is very common, and is [&#8230;]<\/p>\n","protected":false},"author":6,"featured_media":4238,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"epkb_post_type_1_category":[73],"epkb_post_type_1_tag":[],"class_list":["post-14112","epkb_post_type_1","type-epkb_post_type_1","status-publish","has-post-thumbnail","hentry","epkb_post_type_1_category-chap-11-tax-deductions-fringe-benefits"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.8 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Lease Your Automobile to Your S Corp- WCG CPAs &amp; Advisors<\/title>\n<meta name=\"description\" content=\"You Own the Automobile, Lease Back to Your Company? The lease rate needs some discussion as well as if the viability is right for your situation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"You Own the Automobile, Lease Back to Your Company\" \/>\n<meta property=\"og:description\" content=\"You Own the Automobile, Lease Back to Your Company? The lease rate needs some discussion as well as if the viability is right for your situation.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/wcginc.com\/kb\/you-own-the-automobile-lease-back-to-your-company\/\" \/>\n<meta property=\"og:site_name\" content=\"WCG CPAs &amp; Advisors\" \/>\n<meta property=\"article:modified_time\" content=\"2026-01-26T17:10:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/wcginc.com\/wp-content\/uploads\/2020\/06\/3000X3000_2-scaled-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2048\" \/>\n\t<meta property=\"og:image:height\" content=\"2048\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"9 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Lease Your Automobile to Your S Corp- WCG CPAs &amp; Advisors","description":"You Own the Automobile, Lease Back to Your Company? 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