Mileage

[taxea]

If you don't opt for the standard mileage in the first year you can't opt for the standard mileage, even after 5 years. And if he used the standard mileage in the first year, he doesn't need to wait to take actual expenses until/unless the car is more than 5 years old.

Oops, you are correct, my bad. I wasn't considering that the per mile amount includes depreciation whether or not you are still taking it. Guess I was having a brain freeze. When depreciation is done you can only take vehicle expenses.

I wish the vehicle expense didn't force us to do it both ways. If depreciation was taken in the first year, having to fill in all the required mileage info and answer the questions is totally a waste of time. If intention is not to take mileage we should only have to input total and business miles to get to the % of actual expenses we are inputting. The rest of it should only be required if taking mileage. One question on the return, itself, would solve this problem. I am capable of figuring the mileage on a calculator to compare it with actual expenses. If the Tp has a choice of both options.

This is a worksheet...does anyone know of any reason why it couldn't be done the way I suggested? I sure would like to suggest that my software developers consider changing the form.

[DexEA]

Am I missing something?

I agree with Gretel. However, if he did not keep a mileage log he can't take the mileage and if he used mileage deduction the year he put his car in service...I don't think he can take actual expenses unless the car more than 5 years old.

I knew someone would ask that question. Depreciation is generally 5 years on a vehicle. Must use mileage in first year if you want to take other option in coming years. If you don't opt for mileage in first year you cannot take it until depreciation is used up.

If you don't opt for the standard mileage in the first year you can't opt for the standard mileage, even after 5 years. And if he used the standard mileage in the first year, he doesn't need to wait to take actual expenses until/unless the car is more than 5 years old.

[taxea]

Where do you come up with 5 years? If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard mileage rate or actual expenses.

I knew someone would ask that question. Depreciation is generally 5 years on a vehicle. Must use mileage in first year if you want to take other option in coming years. If you don't opt for mileage in first year you cannot take it until depreciation is used up.

[DexEA]

I agree with Gretel. However, if he did not keep a mileage log he can't take the mileage and if he used mileage deduction the year he put his car in service...I don't think he can take actual expenses unless the car more than 5 years old.

Where do you come up with 5 years? If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard mileage rate or actual expenses.

[taxea]

I agree with Gretel. However, if he did not keep a mileage log he can't take the mileage and if he used mileage deduction the year he put his car in service...I don't think he can take actual expenses unless the car more than 5 years old.

[taxea]

I must have missed it, however, I do not recall the exclusive use test being set aside for office in the home.

I have used it many times. Exclusive use is part of how I was taught about OIH

[BHoffman]

Where does the TP store his tools and equipment?

[oceanlovin'ea]

What address is on his business cards and quotes and invoices? It wouldn't be his truck. It would be his home.

For 2013 and future years, tell the man that he needs a desk area where he does such paperwork. It needs to be used for his business needs only. Then for future tax returns, his mileage would count.

Linda, EA

[ddoshan]

Concur ... no mileage. I think it is pretty clear.

[New York Enrolled Agent]

I am lost with the disagreement. If TP does his adminstrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

Gabriele

Without taking a stand on this issue, let me suggest you read a fairly recent Tax Court case Bogue TCM 2011-164. It discussess the 3 exceptions listed in Rev Ruling 99-7 and I like the judge's use of naming the three exceptions. He called the first exception the home office exception.

I'm going to paste one small piece.

Petitioner has the burden of proof on the home office exception, yet he has failed to produce testimony or documentary evidence that he used his home office exclusively for business purposes. Accordingly, we conclude that petitioner has not shown that his residence was his principal place of business. Consequently, we hold that petitioner is not entitled to deduct his commuting expenses under the first exception.

[smithtax]

Semantics

It appears that's where we're lost.

Whether OIH or Principal Place of Business, either must conform to IRC §280A(c)(1)(A) regarding regularity and exclusivity in order to claim mileage.

The only difference between OIH and Principal Place of Business is the deduction of otherwise personal expenses relating to the residence.

[mactoolsix]

From recent O-I-H CPE class

I am lost with the disagreement. If TP does his administrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

I must agree with Gretel on this. There is quite a distinction between O-I-H and a Principal Place of Business. Notes from a recent class on this subject:

O-I-H Qualification Tests
1. The office area must be used exclusively in a taxpayer’s trade or business on a regular and continuing basis.
2. One of the following must also apply.
The home office must be:
a. Used for storing inventory (or product samples) for a wholesale or retail business for which the taxpayer’s home is the only fixed location of the business.
b. Used as a licensed day care center (excepts exclusive use test)
c. A separate structure not attached to the taxpayer’s home but used for business
d. A place where the taxpayer meets with customers, patients, or clients (not just phone calls)
e. The principal place of business for any trade or business of the taxpayer


Principal Place of Business - A home office qualifies as a principal place of business if:
A. The office is used on an exclusive and regular basis for administrative or management activities of any trade or business of the taxpayer, and
B. There is no fixed location of the business where the taxpayer conducts substantial administrative or management activities of the business.

Mike

[ddoshan]

In order for a home office to be considered the taxpayers principal place of business they must meet certain requirements which consist of regular and exclusive use area to conduct management activities. Must meet the regular and exclusive use test or no principal place of business thus no mileage from home to 1st job and or from last job back home. Any mileage from 1st job or appt. to the next site would be ok.

[Gretel]

I am lost with the disagreement. If TP does his adminstrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

[smithtax]

Agree with MAMalody & ddoshan

Rev Rul 99-7

If an office in the taxpayer's residence satisfies the principal place of business requirements of § 280A(c)(1)(A), then the residence is considered a business location for purposes of Rev. Rul. 90--23 or Rev. Rul. 94--47. In these circumstances, the daily transportation expenses incurred in going between the residence and other work locations in the same trade or business are ordinary and necessary business expenses (deductible under § 162(a)). See Curphey; see also Wisconsin Psychiatric Services v. Commissioner, 76 T.C. 839 (1981). In contrast, if an office in the taxpayer's residence does not satisfy the principal place of business requirements of § 280A(c)(1)(A), then the business activity there (if any) is not sufficient to overcome the inherently personal nature of the residence and the daily transportation expenses incurred in going between the residence and regular work locations. In these circumstances, the residence is not considered a business location for purposes of Rev. Rul. 90--23 or Rev. Rul. 94--47, and the daily transportation expenses incurred in going between the residence and regular work locations are personal expenses (nondeductible under §§ 1.162--2(e) and 1.262--1(b)(5)). See Green v. Commissioner, 59 T.C. 456 (1972); Fryer v. Commissioner, T.C. M. 1974--77.



Code Sec. 280A. Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.

(a) General rule

Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.

(b) Exception for interest, taxes, casualty losses, etc.

Subsection (a) shall not apply to any deduction allowable to the taxpayer without regard to its connection with his trade or business (or with his income-producing activity).

(c) Exceptions for certain business or rental use; limitation on deductions for such use


(1) Certain business use

Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis -


(A) as the principal place of business for any trade or business of the taxpayer,