Discussion:Determining storage costs.
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Discussion Forum Index --> Tax Questions --> Determining storage costs.
Figuringitout (talk|edits) said: | 13 April 2006 |
| Corp client uses their property for storage space (garage, shed)for company tools, hardware, etc. - I determined cost of mini storage site of comparable size, then reduced this cost for securtity services that would be recieved at such storage facility. Would this be an acceptable way to determine a monthly cost for storage fees.
Thanks | |
| 14 April 2006 | |
| What is your purpose for trying to figure monthly storage fees? Are you concerned about personal use of business property? I think more facts are needed. | |
Figuringitout (talk|edits) said: | 15 April 2006 |
| I have allocated costs associated with business use of office etc. as a prorata portion of utilities, phone, insurance, property taxes, etc. These have been reimbursements. The storage costs not being an actual reimbursement, but a compensation for use of space that corp would otherwise have had to pay, and to homeowner for loss of space for other use.
Am I thinking to much on this or justified in questioning this deduction. | |
Figuringitout (talk|edits) said: | 15 April 2006 |
| Yes. Sorry. Getting tired out. Since not able to allocate cost of the space used based on square footage as with other costs associated with home use, not sure if deduction is allowed as it is not based on reimbursement of a difined expenditure.
Thanks | |
| 15 April 2006 | |
| So, basically what you are saying is that you have determined a storage fee that the shareholder would charge to the corporation. The corporation would have storage expenses on its return, and the shareholder would have income on his return? Going back to your original question -- does the method used to calculate the fee seem reasonable? I think it is.
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| 15 April 2006 | |
| Natalie - S- Corporations paying individuals rent is an easy way to get monies from the S corp without paying fica and medicare taxes. That is why it is done
Figuringitout - your determination sounds very reasonable | |
Figuringitout (talk|edits) said: | 15 April 2006 |
| Thanks Natalie and Klesher for your help. | |
Figuringitout (talk|edits) said: | 15 April 2006 |
| Would prefer to make it a reimbursable expense of corp then no income to individual. Square footage application not as simple given storage area is part of garage and shed space. | |
| 15 April 2006 | |
| I see your point, Klesher. In Hawaii it does not always make sense to do that type of transaction because there's an additional 4% tax that would need to be paid on the rental income. In addition, sometimes the additional administrative cost of doing certain things just because they save taxes ends up costing more in the long run.
Regarding the question of how to make the cost a reimbursable expense of the company, there is another discussion about home office deductions by an S-corp that I think addressed the same issue. As I recall, you would need to have an accountable plan. | |
| 15 April 2006 | |
| Natalie - this is what makes this forum so very intersting - interesting to see what is going on in other areas of the country. | |
Figuringitout (talk|edits) said: | 16 April 2006 |
| Natalie
I found the discussion regarding home office deductions by an S corp. Thank you and Hawaii sounds really good to me right now, being from Michigan! Klesher This forum is interesting, for sure. Thanks for your help | |
