Empty Miles

[binkleylane]

Happy New Year Frank. A while back I remember some discussion about taking the standard milage deduction for empty /deadhead miles in addition to using the expences, ie. fuel, tolls, maint. ect. deductions that owners would normally take. I have looked back though some of the old forum posts under this header and dont see them, so I'm not sure what the guidelines should be.
If possable could you please review this area.

 

[Fkatz]

HI BINKLEYLANE

THIS ITEM IS A SORE SPOT WITH DRIVERS, THE ACTUAL LAW STATES THAT ANY TRUCK DRIVER CANNOT, I REPEAT CANNOT TAKE ANY DEADHEAD MILES AS A DEDUCTION! THEY HAVE TO USE ACTUAL EXPENSES. THE REASON FOR THIS IS THAT YOU ARE DEDUCTING THE COST OF FUEL, WHICH COVERS THE MILES DRIVEN. YOU CANNOT GET BOTH, EVEN THOUGH IT WOULD BE NICE.

THE WAY IT BREAKS DOWN IS AS FOLLOWS:

Tractors and Straight Trucks over 26,000 lbs GVW. are listed in the Class Life Table of the depreciation instructions as 00.26, and have a class life of 4 years but, depreciated over 3 years. (SOME PREPARERS HAVE TAKEN THE DEADHEAD MILES, AND I HAVE NO IDEA IF THEY WERE AUDITED. SO STICK TO THE LAW, STAY AWAY FROM THE STANDARD MILEAGE/DEADHEAD DEDUCTION. IT COULD CAUSE YOU A BIG PROBLEM.)

Trailers, trailer mounted containers, flat beds, refrigerated trailers are listed as 00.27 and are listed as 6 year life and 5 yeaR depreciated.

Straight Trucks listed between 13,000 lbs & 26,000 lbs GVW, are listed IN THE Class `Life Table as 00.242, with a life of 6 years and depreciated over 5 years. This includes bucket trucks, (BASICALLY THIS IS A GRAY AREA, SOME OWNERS/DRIVERS ARE CLAIMING THE STANDARD MILEAGE DEDUCTION, BUT THE LAW STATES THAT THE ACTUAL EXPENSES ARE SUPPOSED TO BE USED.

Cut Away Cargo Vans & light trucks with a 10-16 ft box, who weight BETWWEEN 10,000 and 13,000 lbs loaded GVW are listed as 00.241, with a 4 year class and over 5 years that they can be depreciated. STANDARD MILEAGE DEDUCTION BASICALLY IS NOT ALLOWED, BUT IS USED 95% OF THE TIME.

Cargo Vans, Automobiles, and Pick-up Trucks, can take the Standard mileage deduction. But, If you decide to take actual expenses and not the standard mileage deduction you are only allowed to depreciate the vehicle for 5 years, with a 3 year life and listed as 00.22.

I have tried to answer your question to the best of my ability, but if you want a better explanation go to IRS PUBLICATIONS WHICH CAN BE PICKED UP AT ANY IRS OFFICE,
PUB 17 GUIDE TO INDIVIDUAL TAX RETURNS
334 TAX GUIDE FOR BUSINESSES (INDIVIDUAL)
463 TRAVEL, ENTERTAINMENT, GIFT, AND CAR EXPENSES
535 BUSINESS EXPENSES

THERE ARE OTHERS INADDITION TO THE ONES MENTIONED ABOVE BUT TO MANY TO LIST.

THANKS FOR THE INQUIRY
FRANK KATZ
FRANKS TAX & BUSINESS SERVICE
308 E. KING ST
KINGS MOUNTAIN, NC 28086
704-739-4039
FAX: 704-739-3934
[www.1040.com/frankstax]
[www.tax-directory.com/NC/frankstax.html]

 

[binkleyln]

Thanks for the quick responce Frank. I thought that that was the right proceedure but had heard, read or saw something to the contrary.
The discussion went something like this; due to the fact that you were basiclly moving to your next job the milage would be deductable. But as you have indicated, you could not use both methods to figure expences.

 

[Fkatz]

HI BENKELYN,

IT TRUE ABOUT WHAT YOU HAD SEEN, BUT IT PERTAINS ONLY TO VEHICLES UNDER THE 10,000 GVW. WHERE THE DEADHEAD IS INCLUDED IN THE MILES THAT DRIVER PUTS ON ALL YEAR, NOT JUST DEADHEAD, THIS IS LEGAL.
THE MAIN REASON IS BECAUSE ANY VEHICLE UNDER 23,000 LBS GVW DO NOT PAY FUEL TAX TO ANY STATE. THEY PAY THE FUEL TAX AT THE PUMP AND ARE NOT CHARGED AT THE IFTA RATE TO THE DIFFERENT STATES
BOX TRUCKS, OVER 26.000 AND TRACTOR TRAILERS 80,000 GVW CANNOT USE THE DEADHEAD MILES THAT THEY RUN DUE TO THE PAYING FOR FUEL.

FRANK

 

[KandS2]

Ok, so since I drive a cargo van, registered less than 10,000lbs, I can deduct my deadhead miles? Or is that *only* if I do *not* deduct my expenses?

Sorry to jump in on the conversation, but I am foggy on this point.

Stay safe out there!

 

[BULLRUSH]

hi i'm leased on to landstar express america with a cargo van. i was audited this past year. the IRS agent told me that i cannot claim miles because (I AM FOR HIRE) and that i can break my leased agreedment with lanstar at anytime and haul freight for myself.I have no DOT authority and can't haul freight unless i am leased on with a company. there is another driver in the same boat as me but is futher along he went to a meeting to discussed his argument but to no prevail they told him at the meeting that he could not take his bussiness with him. a week later he got a letter from the IRS saying he couldn't claim miles because he was (FOR HIRE) ARE THEY RIGHT OR WRONG PS HE ALSO HAS A CARGO VAN UNDER 10000 GVW::-(

 

[Fkatz]

If you are leased to a company like landstar, ctx, tri-state, express 1, tst, tnt, conway fedexcc and others in your contract it should state that the company has exclusive use of your vehicle. this is your proof that you are not for hire. and only carry there loads, or you can take loads from brokers but only through them and pay them a percentage. for the use of there DOT Numbers, Insurance and etc.

There was an article issued by the Cheif Councils Office of the IRS pertaining to this One item. and it was thrown out and and the mileage was allowed, I do not remember where It was, but some one stated the Cheif Council Memo # in early Jan 2001 for 1999, & 2000 returns that were audited. It was here on the site, but Not on my forum, it might be archived on the General forum, I dont know how to get into the archived ones on my forum.
Frank

 

[Fkatz]

Bullrush<
attached is a copy of the correspondance that was orginally posted On January 30, 2001 by DRYRUN

DryRun

Charter Member
4 posts
Rate this user "Standard Mileage vs. Actual Expenses"
Jan-25-01, 11:30 PM (EDST)
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
Subject Author Message Date ID
RE: Standard Mileage vs. Actual Expenses Fkatz Jan-26-01 1
RE: Standard Mileage vs. Actual Expenses Lawrence Jan-26-01 2
RE: Standard Mileage vs. Actual Expenses RichM Jan-28-01 3
RE: Standard Mileage vs. Actual Expenses Fkatz Jan-28-01 5
RE: Standard Mileage vs. Actual Expenses Fkatz Jan-28-01 4
RE: Standard Mileage vs. Actual Expenses Lawrence Jan-28-01 6
RE: Standard Mileage vs. Actual Expenses Fkatz Jan-30-01 7


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Fkatz




Charter Member
86 posts
2 feedbacks
2 points 1. "RE: Standard Mileage vs. Actual Expenses"
Jan-26-01, 00:58 AM (EDST)
In response to message #0

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






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Lawrence




Charter Member
360 posts
4 feedbacks
8 points 2. "RE: Standard Mileage vs. Actual Expenses"
Jan-26-01, 02:37 PM (EDST)
In response to message #0


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






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RichM




Charter Member
363 posts
7 feedbacks
14 points 3. "RE: Standard Mileage vs. Actual Expenses"
Jan-28-01, 04:51 PM (EDST)
In response to message #2

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..





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Fkatz




Charter Member
86 posts
2 feedbacks
2 points 5. "RE: Standard Mileage vs. Actual Expenses"
Jan-28-01, 07:08 PM (EDST)
In response to message #3

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







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Fkatz




Charter Member
86 posts
2 feedbacks
2 points 4. "RE: Standard Mileage vs. Actual Expenses"
Jan-28-01, 04:56 PM (EDST)
In response to message #2

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






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Lawrence




Charter Member
360 posts
4 feedbacks
8 points 6. "RE: Standard Mileage vs. Actual Expenses"
Jan-28-01, 07:50 PM (EDST)
In response to message #4


Lawrence McCord
Frank,

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

Lawrence
Expediters Online.Com