Leasing Welding Truck

[BillV]

My client is a welder and says various company's lease his truck and welder mounted thereon to do welding services for them. He leases this unit for $16 per hour and works for different companies during the week.
He is away from his family home all during the week. What expenses can he deduct to off set this lease income?

[DaveO]

Do they pay him separately or is the $16 for truck and him both? Assuming it's on a 1099 the whole works goes on Schedule "C". If he is leasing the truck without his personal services it still goes on "C". Only if it was an occasional thing could it go on Line 21. This sounds regular and continuous so I vote for "C" treatment. Therefore all ordinary and necessary expense would also go on “C”.

[BillV]

Do they pay him separately or is the $16 for truck and him both? Assuming it's on a 1099 the whole works goes on Schedule "C". If he is leasing the truck without his personal services it still goes on "C". Only if it was an occasional thing could it go on Line 21. This sounds regular and continuous so I vote for "C" treatment. Therefore all ordinary and necessary expense would also go on “C”.

He is paid seperately W-2 and his employer also pays a per diem which is included in wages.

Since he goes from job to job to weld, I was thinking he would be designated a transient and no travel expenses (or fuel) are deductible.

[BillV]

He is paid seperately W-2 and his employer also pays a per diem which is included in wages.

Since he goes from job to job to weld, I was thinking he would be designated a transient and no travel expenses (or fuel) are deductible.

Is this correct?

[Nashville]

Transient

He is paid seperately W-2 and his employer also pays a per diem which is included in wages.

Since he goes from job to job to weld, I was thinking he would be designated a transient and no travel expenses (or fuel) are deductible.

Firstly, he can avoid including the per diem on his W-2 by having his employer institute an "accountable plan," so long as the per diem does not exceed prescribed rates.

If he is paid rent separately, I would explore reporting this rent on Schedule E. However, if he uses the truck in his employment, I don't think any expenses for the truck are deductible except as misc itemized deductions subject to the floor of 2%.

If there is an OPERATION associated with the rent and it is separate from his W-2 revenue, then the those expenses associated with the operation are deductible, but these expenses AND the rental income becomes reportable on Schedule C only.

Taking the position of a "transient" for tax home purposes is extreme and the worst possible scenario. I'm not sure based on the facts given, other than to say the IRS would love for him to be a "transient."

[DaveO]

I concur with what Nashville has stated. I have a rig welder for a client and as he mantains a home for his wife and child I consider that his tax home. The perdiem is reported to him and everything goes on the 2106. He usually gets clipped pretty hard with AMT. In some years it was all on a 1099 so we could use "C".

I have a new client that is considereing a job as a "pump attendent". In that capacity he would stay in a trailer by a pump and monitor it and secure the general area. He would work 4 weeks on and 1 week off similar to offshore oil rig workers. In his case he may be a transient.

[Gary2]

If he is paid rent separately, I would explore reporting this rent on Schedule E.

Schedule E rents are for real estate, only. Rental of personal property is either Schedule C or line 21.