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Can teen leese vehicle from his parent in order to claim mileage on his schedule c

the correct way
Level 2

 

Teenager has a business and needs to claim mileage. Teen does not own a vehicle but uses his parents vehicle. Can teen lease vehicle from parent in order to take the mileage deduction?

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8 Replies 8
Just-Lisa-Now-
Level 15
Level 15

Are mom and dad going to report the lease payments as income?


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
the correct way
Level 2

 Yes I was planning to let them know that they would have to report lease payment received.

They suggested $ 1.00 per month.

 

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TaxGuyBill
Level 15

$1.00 per month is not a real lease.  It would need to be leased at Fair Market Value.

Parents could transfer the title to the child and gift the car to the child so the child would be the owner.  Or if the child does not own the vehicle, just claim the Actual Expenses for the business portion for the vehicle.

the correct way
Level 2

Where would actual expense go for teen that doesn't own vehicle.

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Just-Lisa-Now-
Level 15
Level 15

which software are you using?


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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the correct way
Level 2

 Lacerte, If I show this on schedule c line  9 then doesn't part iv that includes vehicle information has to be filled out. 

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BobKamman
Level 15

Substance over form, and we can only guess whether he drove a thousand miles delivering pizzas, or 10,000 miles selling expensive jewelry.  I wouldn't create paperwork to show a lease that doesn't exist, at least at arm's length.  I would call the use of the vehicle a gift from the parents, and allow him the deduction.  See the Tax Court opinion in Lang, 

 https://www.ustaxcourt.gov/USTCInOP/OpinionViewer.aspx?ID=9397 

-- which involved a mother paying medical expenses and property taxes for her adult daughter.  An IRS auditor with nothing better to do might challenge use of SMR as the best way to value the gift; so use actual expenses, or at least keep a record of them.  

the correct way
Level 2

Looks like the safest deduction at this time would be gas he uses from job to job.  

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