Owner/Operator Long Haul Trucking

[Ray's Tax]

Can an owner operator use the standard mileage rate instead of the actual expenses and depreciation?

[ATSMAN]

Can an owner operator use the standard mileage rate instead of the actual expenses and depreciation?

Assuming he is the owner of the truck he can choose to use standard mileage rate. An employee must use actual expenses.

[TaxGuyBill]

Can an owner operator use the standard mileage rate instead of the actual expenses and depreciation?

I suspect that the actual expenses would result in a MUCH better deduction.

Assuming he is the owner of the truck he can choose to use standard mileage rate. An employee must use actual expenses.

??? Why would an employee need to use the actual expenses?

[kathyc2]

I suspect that the actual expenses would result in a MUCH better deduction.





??? Why would an employee need to use the actual expenses?

I believe he meant that if the employer owns vehicle, the employee can not take standard. The reason would be that depreciation is a component of standard rate.

One caveat to using standard rate is also that the vehicle in question had not taken actual expenses in previous year(s).

[TAX4US]

Am I wrong. I didn't think we could use mileage on these big rigs if this is what we are talking about?

[DaveinTexas]

Vehicle for Hire

IRS says you can't use the standard mileage rate for vehicles used for hire (like taxis, so it states in the Pubs).....

[DaveinTexas]

Oops

I stand corrected, in Rev Proc 2010-51 it states,
(2) Section 4.05(1) is modified to allow taxpayers to use the business standard
mileage rate to calculate the amount of deductions for automobiles used for hire, such
as taxicabs.

It doesn't mention big rig trucks but it does mention the vehicle must be a "passenger" vehicle. Then you could argue that you could fit a passenger in a big rig. Boy, this could run you around in circles for sure!

[taxea]

Quote: ??? Why would an employee need to use the actual expenses?

that's my question too...if employee owns the truck and is not reimbursed by employer for expenses it would be his choice.

If employer owns the truck and doesn't reimburse the expenses then the employee should have the choice of mileage minus depreciation amt or actual expenses minus depreciation because the owner is probably depreciating the truck as an asset. I seriously doubt you would ever find this situation.

[Roland Slugg]

Can an owner operator use the standard mileage rate instead of the actual expenses and depreciation?

No. The SMR is only for business use of passenger automobiles, including vans, pickups or panel trucks.

[ATSMAN]

I know it is generally better to deduct actual expenses for a big rig, but is there any specific prohibition to use SMR if the owner only has one truck?

[TaxGuyBill]

No. The SMR is only for business use of passenger automobiles, including vans, pickups or panel trucks.

Citation?



I can't find anything that would prohibit the Standard Mileage Rate from being used.

https://www.irs.gov/irb/2010-51_IRB/ar14.html#d0e1940

SECTION 3. DEFINITIONS

.01 Standard mileage rate. The term “standard mileage rate” means the amount the Service provides for optional use by taxpayers to substantiate the amount of—
(1) Deductible costs of operating for business purposes automobiles (including vans, pickups, or panel trucks) they own or lease, and
(2) Deductible costs of operating automobiles for charitable, medical, or moving expense purposes.



SECTION 4. BUSINESS STANDARD MILEAGE RATE

.01 Use of the business standard mileage rate. A taxpayer may use the business standard mileage rate (published in an annual notice) to substantiate the amount of a deduction for an automobile that a taxpayer either owns or leases. A taxpayer generally may deduct an amount equal to either the business standard mileage rate times the number of business miles traveled or the actual costs (both fixed and variable) the taxpayer pays or incurs that are allocable to traveling those business miles (subject to the limitations in section 4.05 of this revenue procedure).

.05 Limitations.

(1) A taxpayer may not use the business standard mileage rate to compute the deductible expenses of five or more automobiles a taxpayer owns or leases and uses simultaneously (such as in fleet operations).

(2) A taxpayer may not use the business standard mileage rate to compute the deductible business expenses of an automobile a taxpayer leases unless the taxpayer uses either the business standard mileage rate or a fixed and variable rate allowance (FAVR allowance) (as provided in section 6 of this revenue procedure) for the entire lease period.

(3) A taxpayer may not use the business standard mileage rate to compute the deductible expenses of an automobile for which the taxpayer has (a) claimed depreciation using a method other than straight-line for its estimated useful life, (b) claimed a § 179 deduction, (c) claimed the additional first-year depreciation allowance under, for example, § 168(k) or § 168(n), or (d) used the Accelerated Cost Recovery System (ACRS) under former § 168 or the Modified Accelerated Cost Recovery System (MACRS) under current § 168. By using the business standard mileage rate, the taxpayer has elected to exclude the automobile (if owned) from MACRS pursuant to § 168(f)(1). If, after using the business standard mileage rate, the taxpayer uses actual costs, the taxpayer must use straight-line depreciation for the automobile’s remaining estimated useful life (subject to the applicable depreciation deduction limitations under § 280F).

(4) A taxpayer who is an employee of the United States Postal Service may not use the business standard mileage rate or this revenue procedure to compute the amount of the taxpayer’s deductible automobile expenses incurred in performing services involving the collection and delivery of mail on a rural route if the taxpayer receives qualified reimbursements (as defined in § 162(o)) for the expenses. See § 162(o) for the rules that apply to these qualified reimbursements.

[ATSMAN]

I had one instance several years back where the owner operator of one truck used SMR instead of actual expenses because his log book was more accurate than his girlfriend's accounting of his business expenses! If I recall correctly he filled up his tanks @ several hundred dollars with cash and could not find the receipts! His excuse was that cash price for diesel was cheaper than credit card.

[Lion]

The cites above say Automobile and give examples only as large as panel trucks. Is your client driving something that small?

[Golden Rocket]

Should be a No-Brainer

The expenses of operating a tractor-trailer rig are HUGE - hard to operate under $1.25-$1.50 per mile nowadays and will get worse when diesel fuel goes back up. Why would anyone choose the standard mileage rate?

I'll go even further - there are occasionally attempts to increase income to maximize brackets for EIC. I don't even agree with that since there we are not supposed to ignore expenses that should be consistent with the business when claiming EIC.

And we're having all this discussion about an option which shouldn't even exist. Very much like arguing about the color of a rope to lasso a fish.

[jimo1015]

Actual expense

The long haul trucking operator must use actual expense. I have represented a client in front of the IRS and they do not allow the
standard mileage rate for semi's