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