Hot Shot Driver

[Donanita]

Have a client that is a hot shot truck driver. Company pays him a w2 for driving,a 1099 for truck rental and a 1099 misc. Company includes his w2 wages in the 1099 truck rental so the truck rental and misc goes on a Sch C. Client had 2 loads of rock to put in a extra driveway for his truck. Can the cost of the rock be deducted on Sch C since it is a direct expense or does this increase the basis of his property.

[Koss]

Driveway

You probably have to depreciate it, because it sounds like an improvement to real property...

I don't have an opinion as to whether the depreciation belongs on Form 2106 as an employee business expense arising out of his wage-earning activities, or on Schedule C, as an expense arising out of his self-employment.

Quite frankly, the whole thing sounds a little kinky to me. It sounds a lot like some of those abusive tool rental arrangements.

Any arrangement in which one person is simultaneously functioning as an employee and an independent contractor is suspect. I think it is likely to be interpreted as a sham if the two activities are closely related, or if there is really only one work activity, that has been artificially broken down into two different components.

What exactly is a "hot shot" driver, anyway?

BMK

[taxea]

"Company includes his w2 wages in the 1099 truck rental " How can this happen? If he is an employee then he has to get a W-2. The 1099 for the rental of the truck is reimbursement of 2106. What does the "miscellaneous expenses" pay for...that may be 2106 reimbursement also. taxea

[Donanita]

Hot Shot Driver

is a truck driver that delivers part to oilfield rigs.(Brother worked for Haliburtion and said they paid over a million to drivers a couple years ago.) They can also deliver other products that are needed asap.

Anyway the truck company pays for the drivers truck in the form of truck rent and pays a w2 for the driving. I don't know what the nonemployee money is for but the drivers get print out statement with the truck rent and the wagel minused out, Truck rent was 117,958.86 and w2 was 22383.77 with the nonemployee comp of 12,742.25.
Company pays for fuel,insurance,road tax,fuel tax,commercial lic plates,and charges a lease fee, plus other odds and end charges so by paying for this the company puts these charges in as income to the driver. I agree this is not quite right but this company does this to all their drivers.

[erchess]

Am Confused

Who owns the truck driven by your client and who pays rent to whom?

I agree that something is not right here but I THINK - am not sure, but I THINK that the tax professional and the employee will not draw the wrath of the IRS as long as they are prepared upon request to tell all they know. Original Poster of course owes nothing to the company but I think I would make sure that the driver knows what to do if the IRS writes or stops by.

[Jesse]

Company pays for fuel,insurance,road tax,fuel tax,commercial lic plates,and charges a lease fee, plus other odds and end charges so by paying for this the company puts these charges in as income to the driver. I agree this is not quite right but this company does this to all their drivers.

Does the taxpayer own the truck that he is leasing to the Company? Does the Company reimburse the taxpayer or give the truck owner a nonaccountable allowance? Or are these expenses paid directly to the venders, insurance companies, etc..?

It sounds similar to the employer that pays the employee rent for their home office?

[Donanita]

The client owns the truck and the company gives the client a fuel card for his gas.Company pays all exepnses that I listed in previous post to the venders and them puts the expenses in the clients income in the rent portion.His end of the yr statement reads:
Revenue plus $117976.86
Driver wages minus - $ 22383.77
Driver fees minus -$3018.79
Other Revenue plus $12742.25 this is the nonemployee comp
Interest plus $13.99
Lease fee minus $234.00
Escrow deduct minus $75.00
2009 La appt. plate 80k minus $242.00
Motor vehicle record minus $7.72
IFTA lease file tx dot minus $34.00
Outside insurance minus $1452.60
CD fuel deduct s/c minus $18719.31 gas card
CD service charge minus $800.00
2008 LA licenses plates minus $240.00
UCRA minus $24.00

[RLymanC]

Truck Rent

I believe the IRS would like to see the truck rent on Line 21 listed a PPR, (personal property rental) and the expenses on Sch. A. He's not in the business of renting trucks.

[taxea]

Isn't he in the business of renting the truck if he rents it consistantly and continually? taxea

[Donanita]

Isn't he in the business of renting the truck if he rents it consistantly and continually? taxea[/QUOTE]

Yes, his income for the truck rental and nonemployee comp are reported on Sch C which brings me back to the original question on the two loads of rock he had so he could extend his driveway to be able to park the truck.

[AJsTax]

Stone

Back to the first question,,the gravel in the driveway for a truck parking is often an annual expense. Unless it is for the original construction we take the gravel as an annual expense. 2 loads is not much money usually. Of course that depends on the size of the load, a 10 ton delivery dump or a 40 ton dump trailer.
Even so, an argument can be made that it is normal and necessary on an annual basis.