vehicle

[oceanlovin'ea]

confused too

Let me see if I understand the situation.

Sandy's client is the schedule C employer. He furnishes a vehicle for his employee. So he should be able to deduct all expenses for the vehicle, I would think. He probably takes actual expenses.
Seems to me the mileage questions are misleading. The vehicle is 100% business use by employer. I would think you would put all the miles as business.

Since employee takes vehicle home at night, he will have a fringe benefit added to his W-2 to account for his personal use of taking vehicle home at night.

Did I get it right?

Linda

[veritas]

So you agree

If employer is going to claim 100% business use (and it doesn't matter whether he takes actual expenses or standard mileage), he must be sure that NONE of that taxable fringe ends up on line 26, which it would do in the normal course of events. (Normally, line 26 = sum of W2 wages.)

with what I said?

[Edsel]

No Action Needed

Hi Sandy, I think the "general" response is that no further action is necessary if you already have grossed up his W-2 to account for the commuting miles.

Essentially the company's expenses are all deductible, and the proper amount has been transferred as income to the employee on the W-2.

Situation could become complicated if the vehicle has a possiblity of becoming "listed property" or other exotic factors.

If the employer is a Schedule C entity and you are wishing to report via the mileage method instead of actual expenses, I believe you would include commuting mileage as "business" miles if it is not the Sch C proprietor himself that is commuting. I believe the inclusion of income on the W-2 provides all the proper prostrations that are necessary to allow this to be done.

[veritas]

This is getting way too complicated

1. Deduct all expenses for the automobile 100%.

2. Make sure in section A of form 4562 column C is 100%.

3. Section C form 4562 line 30 enter total miles-Line 31 enter commuting miles-Complete lines 33 through 36.

Done

[appelman]

I don't think that will fly.

How do you propose to come up with 100% business use while showing commuting mileage? At the very least, you would have to override your software, and it would certainly raise eyebrows with the IRS.

But you are right that things are becoming too complicated. There are really two approaches, either of which is acceptable if followed consistently:

(1) Include on Schedule C, line 26, ALL wages from W-2, line 1 (grossed up as the case may be), along with any non-taxable employer-provided fringes. Report business mileage of the car as 14,000, commuting or other use 10,000, business use = 14/24.

(2) Subtract from the total on Schedule C , line 26, the amount added to W-2, line 1 for personal use of the car. Report business mileage of the car as 24,000; business use = 100%.

As I said before, it doesn't matter whether you are taking actual expenses or standard mileage rate. The principle remains the same.

[Edsel]

100% business Use

Remember, the employee is NOT the owner (according to previous posts). This means the concept of "commuting mileage" is out-of-context. The expense was provided for another employee, meaning it is 100% deductible. The employee takes a hit on his W-2 for having commuting provided for him.

Include 100% of all the auto expense (actual or mileage method doesn't matter) as deductible. But make sure the "Wages" deduction does not include the amount added to the employee's W-2. Elsewise there will be a double deduction.

[S T]

Thanks Everyone

I thought this was a "silly post" when I posted and that I should know the answer, but this thread gave some valuable information on treatment of this situation and to enter on the Tax Return.

Thank you!

Sandy