Mileage

[BHoffman]

Where does the TP store his tools and equipment?

[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

[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.

[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]

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]

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]

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.

[geekgirldany]

"The exclusive use test is met with respect to a portion of the taxpayer's home only if there is no use of that portion of the home at any time during the tax year other than for business purposes."

"If a taxpayer's residence is the taxpayer's principal place of business within the meaning of Code Sec. 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance (Rev. Rul. 99-7; Bogue v. Comm'r, T.C. Memo. 2011-164)."

"Section 280A(c)(1)(A) provides, in part, that a taxpayer may deduct expenses for the business use of the portion of the taxpayer's personal residence that is exclusively used on a regular basis as the principal place of business for any trade or business of the taxpayer."

Given the above it is my opinion that he must have an office in home and use that area exclusively to claim the mileage. There has to be a room that is only used for an office. It can not be mixed use.

[Roberts]

Where does the TP store his tools and equipment?

Bingo. Garage storage of literature, samples or equipment is qualified space for the home office deduction. Just because you don't take the home office deduction doesn't mean it isn't an approved space. If he stores his equipment in a bunch of cabinets lining the walls of his garage it may only be 75 square feet of a 3,500 sq/ft home so the deduction isn't going to be significantly beneficial so they may not waste their time with it. At the same time it still is qualified space.

[Roberts]

"The exclusive use test is met with respect to a portion of the taxpayer's home only if there is no use of that portion of the home at any time during the tax year other than for business purposes."

Given the above it is my opinion that he must have an office in home or be using an area to store tools and use that area exclusively to claim the mileage. There has to be a room that is only used for an office. It can not be mixed use.

If the contractor is storing equipment in his garage or basement, it meets the use test. The office use space doesn't have to be within the living space of the home or a room within the house. A cabinet in the front of his garage used to store tools for his business would qualify as his office.

[Gretel]

How would a storage area only, exclusively used for business, make the home the principle place of business ? OIH deduction yes, but the OP is about mileage. Maybe I misunderstand?

[ddoshan]

I also question / wonder about the storage of equipment or whatever as being a qualified reason that a taxpayer may be allowed mileage from home. I could be wrong, but it was my understanding that in order to be able to deduct the mileage your home must qualify as your principal place of business with regular and exclusive use and not just because you happen to store some equipment or supplies or whatever.
Note... I don't think you have to actually take or use the office in the home deduction on the tax return to meet the test. Although this may be debateable. But you still have to meet the regular and exclusive use test as your principal place of business.

[Roberts]

How would a storage area only, exclusively used for business, make the home the principle place of business ? OIH deduction yes, but the OP is about mileage. Maybe I misunderstand?

You have to prove you have a principal place of business. Is he doing bookkeeping in his home? Most likely. Scheduling client visits? Most likely. If he's storing his equipment in the home, he's also likely repairing and servicing the equipment in the home. IMO, that's a principal place of business. A carpenter will have daily repairs and maintenance for equipment. If he rented a garage / office to do all those things right down the street from his house, it would be a normal and accepted principal place of business.

[Gretel]

Roberts

Let me get this straight.

If t/p has an exclusive space for storage, which will allow him to claim OIH, then the office inside the home used for business does not need to be exclusively for business for the purpose of claiming mileage? This is under the assumption that he does all administrative work at home but the space is not exclusively used for business as the storage is.

[joanmcq]

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.

You have to use standard in the first year AND use straight line depreciation. No MACRS.