Living quarters may be provided on a tax deductible basis for the corporation and tax free to the shareholder-employee if the corporation requires him to live on the premises for a good business reason.

This might apply for the shareholder serving as a hotel, motel, farm or ranch manager. It might also apply to the manager of a nursing home, hospital or funeral home and other occupations requiring close and more or less continuous availability in connection with the business.

Use of deductible company car:
The use of a company car can be a valuable fringe benefit. The expenses of the car, including depreciation, are deductible by the corporation and not taxable to the shareholder-employee if it is used exclusively on company business.

If a shareholder-executive is given the use of two cars, and it is clear that one of them is being used by his wife for non-business purposes, he will be taxed on the value of the use of the car. But his tax liability will be less than the cost of renting a car and most likely less than it would cost him to buy, finance and maintain the car on his own.

If the extra car is treated as extra compensation, the attending expenses are deductible by the corporations as compensation, subject to the overall limitation of reasonableness. If treated as dividend income to the shareholder, it would not be deductible by the corporation.

Deductible chauffeur: The cost of a chauffeur may be deductible by the corporation and taxable to the shareholder-employee if deemed an "ordinary and necessary expense," sometimes translated as " appropriate and helpful."

Company dining room. Employee cafeterias, and other "eating facilities" operated by an employer for employees are not subject to the 80% limit on business meal deductions if the eating facility...

1. Located on the business premises of the employer.
2. And brings in revenue that normally equals or exceeds its direct operating cost, and
3. Does not discriminate in favor of highly compensated employees.

Leasing assets to your own corporation:
The fact that the corporate form is selected as the basis mean of conducting a business enterprise does not mean that all the physical components of the enterprise need be owned by the corporation. Indeed, there may be legal, tax and personal financial planning reasons for not having the corporation own all the assets to be used in the business.

Whether the corporation is to be the continuation of a sole proprietorship or partnership or a whole new enterprise, decisions can be made about which assets owned by the predecessor or acquired for use in the corporation are to be owned by the corporation and which assets are to be made available to the corporation through a leasing or other contractual arrangement.

For the assets that go to the corporation, decisions must be made about how they are to be held and on what terms they to be made available to the corporation.

There are several possible choices. The assets may be owned by:

1. An individual shareholder or some member of his family.
2. A partnership, limited or general, in which family members participate, or
3. A trust for the benefit of family members.

A separate corporation is still another possibility, but the risk of being considered a personal holding company and incurring penalties due to passive income (including rent and royalties) may make this impractical.

Normally, a leasing arrangement is used for the assets to be made available for corporate use. Assuming that the rental is fair, it would be deductible by the corporation and taxable to the lessor. Against the rental income, the lessor would have possible deductions for interest paid on loans financing the acquisition of the assets, depreciation, maintenance and repairs, insurance and administration costs.
These deductions might produce a tax free cash flow for the lessor. When depreciation and interest deductions begin to run out.