[DryRun]

Please address the issue of using standard mileage vs. the actual expense write off.

Several "B" unit contractors have recently lost in IRS audits re this deduction. The IRS has issued a Chief Councel Memorandum (CCM) laying down framework for decisions based on the term "for hire," due to lack of case law.

Basically, if I read this correctly: Vehicles in the courier business were not for hire, and thus the standard mileage deduction could be used. However, the CCM did state that it could be found that a courier service vehicle was used for hire if extenuating circumstances were present (e.g., a unique vehicle was required by the customer, or payment was based upon miles driven.)

"For hire" seems to be a key phrase, applying to both property AND a service. The CCM concluded that a vehicle for hire must come within the hiring of property, whereas an individual hired to deliver freight has been hired to provide a service.

Given the latitude that this seems to give the IRS, I have opted for the actual expense deduction. While the standard mileage rate usually gives the better return, I feel that the large $ figure may raise a red flag, particularly when yearly miles driven approach 100K. However, I'd like to get your input on this, and anybody else's experiences or thoughts.

Thanks for the great forum idea!

[Fkatz]

DRYRUN,

Since your stating a Chief Council Memo I am going to check this out throughly before I give you a straight answer.

But As an O/O and leased on to CTX I have used the standard mileage rate for since 1995. and have not been audited.

When I an doing returns I have a driver who is able to take the mileage deduction on the miles he drives also.

But as I said let me check this out completely
I will get back to you as fast as I can with an answer

Frank Katz

[Lawrence]

http://www.expeditersonline.com/dcfo...916b891a19.jpg
Lawrence McCord


I know a B unit operator who went through the audit process in 1997 and the fact that he took the standard mileage deduction was scrutinized. He and several other van operators were being audited about the same issue. He and the other van operators contacted their Congressman and the whole issue was dropped.

I think most van operators take the standard mileage deduction.

Lawrence
Expediters Online.Com

[RichM]

As I said in a different post I have always run D units and have taken the standard mileage deduction. My tax accountant who at one time worked for the IRS advised this.I was audited once and had no problems with the standard deduction.However that was several years ago. In looking at driving 100 k per year thats $32,500 as a deduction giving me about $5000 more than if I took depreciation and operating costs. One gray area that I heard about is that if you have a legal sleeper,motel costs are not deductible..Don!t know if that is true or not.It would be nice if we could take the standard per diem for business travel which I think is $135.00 per day but I don!t believe that applies to transportatin workers..

[Fkatz]

Lawrence,

I just found out to what DryRun was pertaining to, it is true that the standard mileage deduction on the audits were not allowed, for "B" units, but, since it has been dropped the deduction is allowed.
There are other "BUTS" but that is for the use of "C, D, and E" units which must use the actual expense.

Frank

[Fkatz]

Rich M. & DryRun,

In answer to your questions regarding the subject above, the IRS has now put a RED FLAG on standard mileage deduction for trucks.
Now when you put in the mileage you have to put the type of vehicle u use. IF you put Chevy, Ford, or Dodge Lt. truck, for a "B"unit, you will have no problem.
The standard miles are allowable since the problem with the Cheif Council Memo(CCM) that was released as DryRun had said in his question, but in "B" units only.(if you have a sign with the company u are leased to on the vehicle you are NOT "FOR HIRE" which according to some audits were disallowed.
But if they(audits)were disallowed I would suggest Amending the returns, but I would take the disallowance and run, you do not want to open up a can of worms, so they can scrutinize the rest of your return, if you itemize.

The answer to Part II in reference to Motels, you cannot use the high and low Diem rates published in IRS Publication 1542, what you use is the actual cost for the motel, tolls, and anything else that you spend for the truck, including a porta-potti, if you have one. Meals and entertainment u use the transportation allowance of $38.00 and 42.00 per day for everyday you are out, logged. you can use the higher rate for the areas of the country that you go through per the publication.

You can download and view or print the publications from the IRS web site

The Publication you should select are:
# 15 and 15A are for employers
17 for individuals
334 information for small businesses
534 business expenses
587 business use of home
946 depreciation expenses
1542 diem rates

if you have anyother questions please ask
thank you
Frank Katz

[Lawrence]

http://www.expeditersonline.com/dcfo...916b891a19.jpg
Lawrence McCord

Frank,

Geez, :D I'm impressed - thank you for your research and answers!

Lawrence
Expediters Online.Com

[Fkatz]

Lawrence,

Thank you for the confidence

Frank
PS.
Still looking for a driver for my Van at with lease purchase or buy out available.
while I am doing this. Leased on to CTX Have them check out my adds.