Bread Deliveryman

[JoshinNC]

Got a question as to how to handle the truck driven by a bread delivery person. Client says that he was "buying" truck from company. If he paid them $300 per month (deducted from his earnings) at the end of 60 months he would own the truck. Well, he only worked for them for 6 months and then quit. I asked him what happened to the truck and he said "the next guy gets to 'buy' it from them for what is left owing on it". I asked him did this "loan" show up as a default on his credit report or did he get anything stating that it was a defaulted loan. He says no. My question is whether this is truly a capital asset that needs to be depreciated or does just take a deduction for lease expense? I thing a bread truck would cost more than $18,000 to buy, so that can't be the full price.

Anybody with experience with this type of employment or a general comment is welcome to respond.

[taxmandan]

Property placed in service and disposed of in the same year is not depreciated. Did he have a written purchase agreement on the truck? I would report the payments as rental expense.

[erchess]

OP didn't state client's Employment Status

but I will eat a CD Rom (but not a DVD lol) if he was not being treated as a private contractor. I would also lay a heavy bet that he should have been treated as an employee. Would he like to make some trouble for the company and reduce his tax bill?

[BOB W]

I agree....

... take the payments as rental expense..........

[JoshinNC]

All these folks are IC's

Have been for years and years. They buy the product from the bakery at cost then sell it to the stores. I think rental is a good way to deal with this one.

Thanks for everyone's input.

[Jiggers]

Delivery Persons as IC

Our local bread and milk companies changed from employees to IC several years ago. Either the now former employee had to buy the equipment or he had no part in the change. I don't know how the IRS let these companies do this.