Depreciation or Standard Mileage Deduction
- Thread starter dhalltoyo
- Start date
Many cargo van owners have pondered the choice of depreciation or mileage. The key to the greatest benefit is thinking long term. If you choose depreciation, you can't change to mileage later.
Effective January 1, 2007 the standard mileage allowance is 48.5 cents per mile for business miles driven. If you drive a total of 500,000 Sprinter miles at the current rate, you'll have total deductions of $242,500 over five +/- tax years. Will the depreciated cost of your van, plus allowable operating expense deductions equal that much? You should already have that answer if you've forecast your expenses properly.
Effective January 1, 2007 the standard mileage allowance is 48.5 cents per mile for business miles driven. If you drive a total of 500,000 Sprinter miles at the current rate, you'll have total deductions of $242,500 over five +/- tax years. Will the depreciated cost of your van, plus allowable operating expense deductions equal that much? You should already have that answer if you've forecast your expenses properly.
Thank you Terry,
the Depreciation is not the greatess for of deduction, but for persons who do not put the high mileage on it. it might be considered the best way,
The only problem is that is could post a "Red Flag" for an IRS Audit, due to the fact that your contract with the leasing company has an excluesive use clause. Back a few years the Chief Council of the IRS issued a Memorandum #CCM 1997-40 in reference to this deduction and found that it did not pertain to A cargo Van used on for the leasing company only. and cannot considered "Not For Hire" Where as the IRS used this excuse to say that it was "FOR HIRE" AND DISALLOWED THE DEDUCTION.
The CCM Memo, states that you are not "For HIRE", and therefore you can use the deduction. If you need a copy of the CCM Memo, just E-mail me direcly at [email protected] and I will be glad to send you one attached. This is only if you are audited for the mileage deduction.
Frank
the Depreciation is not the greatess for of deduction, but for persons who do not put the high mileage on it. it might be considered the best way,
The only problem is that is could post a "Red Flag" for an IRS Audit, due to the fact that your contract with the leasing company has an excluesive use clause. Back a few years the Chief Council of the IRS issued a Memorandum #CCM 1997-40 in reference to this deduction and found that it did not pertain to A cargo Van used on for the leasing company only. and cannot considered "Not For Hire" Where as the IRS used this excuse to say that it was "FOR HIRE" AND DISALLOWED THE DEDUCTION.
The CCM Memo, states that you are not "For HIRE", and therefore you can use the deduction. If you need a copy of the CCM Memo, just E-mail me direcly at [email protected] and I will be glad to send you one attached. This is only if you are audited for the mileage deduction.
Frank
Frank:
Your comments have inspired me to think about the newest trend with leased expediters. Getting one's own authority to pick-up a load, now and then, when experiencing a dry spell with their carrier.
Many of us use the mileage allowance in lieu of depreciation and actual expenses. May van owners who work outside of their lease agreement, with the permission of their carrier, elect to use the mileage allowance? It would seem to me that they may not.
Your comments have inspired me to think about the newest trend with leased expediters. Getting one's own authority to pick-up a load, now and then, when experiencing a dry spell with their carrier.
Many of us use the mileage allowance in lieu of depreciation and actual expenses. May van owners who work outside of their lease agreement, with the permission of their carrier, elect to use the mileage allowance? It would seem to me that they may not.
Terry,
If they go off lease then they cannot take the standard mileage rate and be protected,
If the carrier that they are lease with pays them after they take the load under there insurance then it would be considered mileage rate,
but if they recieved a separate 1099 from the broker using there own authority, they might be RED FLAGED FOR A DENFINTE AUDIT.
Frank
If they go off lease then they cannot take the standard mileage rate and be protected,
If the carrier that they are lease with pays them after they take the load under there insurance then it would be considered mileage rate,
but if they recieved a separate 1099 from the broker using there own authority, they might be RED FLAGED FOR A DENFINTE AUDIT.
Frank
Frank,
If I go with standard mileage deduction(which I already did for 07)does that mean I don't have to keep all my receipts(fuel,tolls etc) for 08. It sounds like keeping receipts isn't necessary for doing your taxes, if you go with standard mileage deduction. Am I correct?
If I go with standard mileage deduction(which I already did for 07)does that mean I don't have to keep all my receipts(fuel,tolls etc) for 08. It sounds like keeping receipts isn't necessary for doing your taxes, if you go with standard mileage deduction. Am I correct?