Police Officer Deductions

[Bettie Cheek]

T/P is a police officer. He works for the city and off duty doing security. The city income is approximately 85% of wages and balance is 1099 income. Iwas going to allocate expenses between 2106 and Sch C. I am unsure what to do because he buys a new motorcycle each year which he is required to have. He drives it back and forth to work and is on duty when he does so. The city reimburses him $4800 for gas and insurance. He keeps no records of gas. I am stumped as to how to deduct this. I am stumped because of the buy and sell every year. Thanks for your help.

[thomtax]

Bettie,

This will not be of any help in answering your question, but I thought you migh be interested.
There is a tax preparer from the northern part of our state that is in prison. His crime - He told deputy sheriffs in the area that he knew of several deductions that law enforcement officers could take, that the other preparers in the area did not know about. Now there are several of these officers that are on payment plans to the IRS for taxes, penalties and interest on these returns.

If I were him,I would not want to return home after getting out of prison. These same officers might just be a little miffed at the problems he caused them and be in a mood to cause him problems. This is one place where I would call the preparer just plain stupid, not considering who he was messing with.

LT

[Zee]

T/P is a police officer. He works for the city and off duty doing security. The city income is approximately 85% of wages and balance is 1099 income. Iwas going to allocate expenses between 2106 and Sch C. I am unsure what to do because he buys a new motorcycle each year which he is required to have. He drives it back and forth to work and is on duty when he does so. The city reimburses him $4800 for gas and insurance. He keeps no records of gas. I am stumped as to how to deduct this. I am stumped because of the buy and sell every year. Thanks for your help.

This sounds unusual, the way the question is written it seems to imply the client isn't a motorcycle patrolman, but is required to purchase a motorcyle to commute to the station? I do know police officer's are often allowed to take home their vehicles, but I think that's mainly because they're in their vehicles most of the day and need to be available for emergencies 24 hours a day. I'll be interested to hear other responses to this question.

[ChEAr$]

If he's required to have a motorcyle,

T/P is a police officer. He works for the city and off duty doing security. The city income is approximately 85% of wages and balance is 1099 income. Iwas going to allocate expenses between 2106 and Sch C. I am unsure what to do because he buys a new motorcycle each year which he is required to have. He drives it back and forth to work and is on duty when he does so. The city reimburses him $4800 for gas and insurance. He keeps no records of gas. I am stumped as to how to deduct this. I am stumped because of the buy and sell every year. Thanks for your help.

better have him get that in writing. I am highly suspicious of this. City liability coverage
would not extend to personally owned vehicles being used on "company" time.
All cities I know of furnish transportation while on duty.

[jainen]

privately owned

>>City liability coverage would not extend to personally owned vehicles being used on "company" time<<

No, I think it is commonplace for motorcycle cops to own their own vehicles. Probably universal -- who would want to ride a two-wheeler out of the county motor pool?

It's not so unusual for police officers to provide their own equipment. Other items include the uniform, weapons, and dogs -- all quite appropriately privately owned.

[Black Bart]

All the Wrong Stuff

T/P is a police officer. He works for the city and off duty doing security. The city income is approximately 85% of wages and balance is 1099 income. Iwas going to allocate expenses between 2106 and Sch C. I am unsure what to do because he buys a new motorcycle each year which he is required to have. He drives it back and forth to work and is on duty when he does so. The city reimburses him $4800 for gas and insurance. He keeps no records of gas. I am stumped as to how to deduct this. I am stumped because of the buy and sell every year. Thanks for your help.

This one has all the problems you love to hate:
1. He's a local cop -- you may foul it up sometime during the rest of your/his life and he may be mad at you for the same length of time.
2. No records (of course), so, right off, you have to guess at expenses.
3. It's part C - part 2106 (truckers do this some too) and everything has to be split up.
4. Trades off the equipment every year requiring a constant 4562 shuffling around.
5. It's a motorcycle, so no standard mileage allowance (I think).
6. Probably can't get too much money out of it. Can't gouge him for this outrageous burden 'cause, again, you don't want to make him mad or make him think you're incompetent and tell his buddies.

I can't provide cites (you have to get jainen for that), but I guess here's what I would do in your spot.

Tell him he has to ask for and keep gas tickets for '07 -- say he has to help you or you can't do it next time. For '06, ask how many tanks of gas he buys a week and multiply by the going rate times 52. Ask for his insurance bills or tell him to call the agent and get the 6 months policy rate times two. I guess I'd use the 85-15% income split for expenses too -- although the amount of money isn't necessarily definitive as to expenses incurred in each job, it's probably close enough to the real thing to use.

About the bikes, it would be nice if the standard mileage allowance covered them, but I don't think it does -- I was in a discussion about this once and I think the conclusion was it didn't apply to m/c (if anybody knows different, feel free to chime in here). Anyway, as you know, if they buy and sell one during the same year, there's no depreciation. But he probably justs gets one in each year and you have to keep them on the schedule like a car until it runs out and maybe eventually having a funny-looking 15-bike depreciation schedule. A possible work-around (depreciation something like the "old days"): I saw a discussion (I think it was on QF between abby, Jiggers, and somebody else) a couple of years ago about there being an election available -- per an NCPE seminar -- that you could show the traded-in old asset as a sale for the amount of trade-in allowance and then depreciate the remaining cost of the new asset, while getting the old bike off the schedule. At least that's the way I remember it (I've never actually done it) and maybe one of them will read this and clarify. I think I'd just list the asset as 15% interest-M/C and 85% interest-M/C (or something like that) on the respective depreciation lists. As to commuting, I guess you could argue that one all day, but if he's "on duty" when he rides out of the yard, that's good enough for me. Besides, considering the reimbursement, he's probably going to make money on the deal and have a taxable gain instead of a loss.

Well, that's it. It's not scientific, but I didn't see any other offers.

P.S. Don't believe everything these Arkansas boys tell you -- there's two sides to every story. Thom didn't give you entire lowdown. Although I will be out any day now and may indeed have to relocate, it was absolutely true that I did, for a while, know sump'n other tax preparers don't (even jainen). What that was; I told those cops I had a buddy at IRS who tipped me off about a little-known break for them which was this: because of the high stress level and risk of bodily harm inherent in their jobs, they were entitled to deduct all the French lingerie that they could afford to buy for their wives and girlfriends (you never saw such a spendin' spree -- Frederick's of Hollywood stock went up five points!). But anyhow, my buddy was later diagnosed as a delusional paranoid schizophrenic (and was crazy too) -- turns out, that deduction does not actually exist. Too, my cousin once sold the judge a late-model lemon ('76 Oldsmobile) and he definitely lacked a sense of humor.



Disclaimer: This written advice can be used for anything you want to, but you're crazy if you do. If you try to avoid penalties and so forth by doing it, I'd advise you not to go before a certain northern Arkansas judge.

[Snaggletooth]

Donuts

Bart, your little-known secret unknown to other Arkansas preparers was that the huge deduction for donuts was deductible. This will soon no longer be a secret as Dunkin Donuts announces it will finally open a store in Forest City.

Do they still give you $10 for cab fare when they let you out?

Snag