Somewhat unusual deduction perhaps?

[mblatour]

I have a tax client who asked me a question about a deduction the other day. Thing is, I'm not 100% certain it would fly. Here's the scenario:

Client has 2 home businesses. He uses the same home office for both businesses and also has a work shop for one of them. He has clients come to the home office for one of the businesses. He also has a very lengthy driveway which needs plowing in the winter time - we're talking 1400 feet minimum. Up here, we get a lot of snow and it tends to be for nearly 1/2 of the year. He used to pay to have his driveway plowed, but not has decided to do it himself. He bought a $4,000 Boss V-plow for plowing the driveway and parking areas in front of his house.

Obviously the driveway would have to be plowed regardless because of the fact that it is a personal residence as well. But it also has to be plowed for the clients to "get in" to the office. Would you take this as a Section 179 deduction (and not depreciate it)? And for what percentage of the purchase (if any) would you take?

FYI - Client would only be using the plow for his business and personal use; meaning he won't be going around plowing other driveways.

Thanks for any input!

Becky

[Corduroy Frog]

No s. 179

The snow plow is "listed" property. No problem in taking 2 homes businesses as you have described, but even so it would be doubtful the home office deduction would be greater than 50% of domestic expenses, including the snow plow.

If somehow the OIH expense were over 50%, and then at some point they calculated to be less than 50%, then you would have to recapture the s. 179 expense. This would not make him happy.

[mblatour]

more info......

If you add the OIH and the workshop together, they only come to about 18% of the total sq. footage. So therefore the expenses related to OIH are not over 50%; by a long shot.

Ugh, I hate recapture.

Any other thoughts or opinions out there?

Thanks!

Becky

[ChEAr$]

The snow plow is "listed" property.

You lost me there. How is a snow plow "listed" property? Somehow I can't find
that in the literature.

[travis bickle]

Please tell me

how the snow plow is an "ordinary and necessary" expense.

[Nashville]

Boss V Plow

If you live in Alabama you wouldn't know. Living in Tennessee doesn't exactly qualify me as being a neighbor from the "frozen north." So I don't know what a "Boss V" is either.

You and I can sure talk about Lawn Mowers though, and can compare a Murray against a John Deere, and it is much like comparing a Yugo against a Rolls Royce. Original post makes a point about a very long driveway and lots of snow in northern MN. If he cleans his driveway with a snow plow this would make it listed property if it were part residential and part business.

Maybe some of you from those Canadian border states can tell us what a "Boss V" is and whether it is any good. If it really is a good machine, I might give one to Harlan in time for Christmas...

[DaveO]

The Boss V plow is hinged in the middle for greater control in moving the snow. It is an attachment to a pickup truck not a stand alone device. I would be comfortable with depreciating it at the same % as the home office. If that's 18% then I would take 18% use of the plow as a business deduction.

[Bees Knees]

Boss V Snow Plow attached to front end of pickup.

[Bees Knees]

Snow removal is not mentioned in IRS Pub 587. There are two similar items mentioned.

On page 8, lawn care is listed as an unrelated expense that is not deductible. On page 9 under utilities and services, it says:

Expenses for utilities and services, such as electricity, gas,
trash removal, and cleaning services, are primarily
personal expenses. However, if you use part of your home for
business, you can deduct the business part of these ex-
penses. Generally, the business percentage for utilities is
the same as the percentage of your home used for busi-
ness.

Note that the OIH percentage for cleaning and trash removal may be deductible as an OIH expense. I believe snow removal is of the same nature as cleaning and trash removal. Thus, I would take the OIH percentage of the cost of snow removal as an OIH expense. Whether it is in the form of paying another for the service, or buying the equipment to do it yourself.

[JG EA]

...Whether it is in the form of paying another for the service, or buying the equipment to do it yourself.

'buying the equipment" I find this very interesting. Previously, I would have taken the position that depreciating, expensing any equipment would not work. I would take a percentage of the expenses (gas, oil, etc.) but not the equipment. I would view this the same as a taxpayer taking the position of capital gain over business income that comes up from time to time and in such cases equipment would be owned by the person and depreciaton would be crossing the line as a business.

[newbie]

Unless I am missing something, it is a business that he operates out of his home so what line would be crossed by depreciating the equipment?

Clients come to my home so my driveway needs to be plowed, fortunately I have a very short drive way and kids with shovels! If I had to buy a plow I would take depreciation, gas, oil, etc. or if I paid someone for the service a percentage of the fee.

[FEDUKE404]

Toss onto Form 8829 if you wish

The best I could envision here is somehow treating the snow removal equipment and its operation as another "indirect expense" on Form 8829. Then the annual allowable OIH expenses would be governed by the square footage, income issues, etc.

I see a real challenge as to problems with what expenses go to which Schedule C (two of them, right?). In addition to that, you probably would need to keep some record of client visits during the "snowy season" as a reasonable person might see a lot of personal, non-tax related issued rattling around by merely removing snow from a driveway of a residence on a regular and/or as needed basis.

And depending on how you decide to depreciate the equipment, things could really become troublesome tracking all of the records for the piece of a piece of a piece annual deduction.

FE

[Bees Knees]

'buying the equipment" I find this very interesting. Previously, I would have taken the position that depreciating, expensing any equipment would not work.

And what tax theory are you basing that opinion on? Surely you understand the concept of depreciating an asset that is not used 100% for business.

I see no problem depreciating the business percentage of equipment used for business. The only issue is you have to use straight line if the business percentage is 50% or less.

[Jesse]

What type of business is this? Original post states there is a shop, are there employees or subcontractors that come on a regular basis?

A need to have a driveway plowed may differ for a seasonal tax preparer in Duluth vs. a Greenhouse/nursery type business in Duluth who's business would most likely be heavy in the "non-snow" season.

There may be a personal reason to need to have the driveway plowed but if you also have clients/customers coming on a daily basis there would also be a necessity to have the drive way plowed for business reasons. An appointment calendar to show the activity could support the need.

[mblatour]

Wow!

I get a little busy and can't check the board and then all of a sudden I check it and BAM, lot's of responses. That's why I love this board.

First of all, I am sorry for the assumption that the southern folk would know what a Boss V-Plow is. It's very common up here; just as common as a lawn mower. Either you shovel, snowblow or snowplow your driveway/sidewalk. In the country where I live, you cannot possibly shovel or even snowblow (at least with a walk-behind type) your driveway. That's a heart attack waiting to happen. Just plowing with your truck can take a couple of hours. Sometimes you plow it several times a day during the really good dumpings of snow we can get up here. It's not uncommon to see over 80" of snow in one season. Heck, I've seen over 20" in just a couple of days several times in my lifetime. We have Lake Superior to thank for that.

My client who sees clients at his home office for one of the businesses says that he averages about 150-200 appts. during the winter months. He has a record for every appt. (date and time).

Snow removal to me would qualify as just as ordinary and necessary as trash removal or power/phone service in our neck of the woods. There's hardly a home around here that doesn't own at least one four-wheel drive vehicle. Most of the time, the county and city plows have a hard time keeping up with snow removal. At times it gets so bad that they will even pull the plows off of the roads to wait things out for awhile and then plow when they deem it safe enough for the giant equipment to be out.

When a client makes a big purchase like this and believes that there is a valid business deduction for it, it makes it difficult to say to them they won't benefit from it the way they believe they will. And when I get so many differing responses, it makes it difficult for me to know which route is the best to take. I'll just sort it out the best I can and hope for the best. Thanks again for all of the contributing thoughts.

Becky