Another mileage question

[equinecpa]

Taxpayer works at home office in rural area. Drives to town to drop off child at sporting facility. Goes to Bank while there (business banking), office supply store, pick up child and comes home. How much of the mileage would you claim?

a) 50%-argue that 50% of the trip was for business purposes
b) Mileage between sporting facility-bank-office supply-sporting facility?

Would your calculation change if we changed the order of the stops to home-Office supply store-drop off child-bank-home?

[ATSMAN]

This is one of those slippery questions, clients ask me all the time and i tell them it depends on the facts and circumstances.

1) Was the purpose of the trip primarily to drop off the child and then stop by the ATM or drive through banking to get some cash? Does this happen each day, or very infrequently?

2) How many miles are we talking about? I am in a city so the mileage to go from home to daycare is less than 20 miles in almost 90% of the time. Is it worth it risking an audit?

[Kram BergGold]

All or Nothing, My Take

Either the trip is prinarily for business and you deduct or it is primarily personal and you do not. Here is a way to look at it. If he stops at the ATM to deposit business receipts first, that is business. Then if he continues to day care that is not. Then deduct the home to ATM distance for the return trip. If he stops at day care first then this is personal, no deduction, Then if he goes to buy office supplies that and the trip home is business.

[equinecpa]

This is one of those slippery questions, clients ask me all the time and i tell them it depends on the facts and circumstances.

1) Was the purpose of the trip primarily to drop off the child and then stop by the ATM or drive through banking to get some cash? Does this happen each day, or very infrequently?

2) How many miles are we talking about? I am in a city so the mileage to go from home to daycare is less than 20 miles in almost 90% of the time. Is it worth it risking an audit?

I get asked all of the time and have a lot of farm clients so they tend to combine trips and do everything in one trip. Mileage round trip might be 75-100 miles. I usually say split it 50/50 but just curious what you think is "by the book"

[jsamans]

I get asked all of the time and have a lot of farm clients so they tend to combine trips and do everything in one trip. Mileage round trip might be 75-100 miles. I usually say split it 50/50 but just curious what you think is "by the book"

This is an ambiguous situation, in that it is not specifically addressed to the best of my knowledge, and attempting to apply the general principles of other aspects of business/personal expense allocation (such as travel) depends on the facts and circumstances. My own impression is that if the dropping off of the child adds no substantial distance to the trip -- for instance, if the drop-off location lies along the same route taken to get to the bank -- and the trip to the bank was for substantial business purposes that make reasonable sense given the facts and circumstances (which they probably do if the trips are infrequent), then the taxpayer should deduct the total mileage for the roundtrip to the bank and treat that as the purpose of the trip in his or her mileage log.

If the trips are daily or very frequently, such that there would be no reason to visit the bank or office supply store on each visit, then the facts and circumstances strike me as an attempt to cloak a personal trip as a business trip, which is not a good idea and is unlikely to hold up to scrutiny. As long as the frequency of trips is well founded given the situation, however, I view the drop-off in the same manner as someone stopping to get gasoline, and ducking into the convenience store while there to buy a (non-deductible) snack, i.e. something that doesn't change the character of the trip.

Also, keep in mind that substantiating the mileage relies almost entirely on the mileage log and the taxpayer's own narrative. If challenged, a taxpayer who can articulate the facts and circumstances in a way that meets the above logic is very likely to be approved.

[taxea]

Is drop off between home and other trips or does TP have to back-track for business use? I would allocate depending on locations.
Does TP stay out the entire time on business trips? Depending on the answers. I would subtract the home to drop off and back as personal. I don't see how one could 50/50 unless the business miles is equal to the personal miles.