Mileage paid & reimbursed > Std mileage rate

[KJ Judd]

Client will be charging their customers mileage at $.60/mi in 2008 and reimbursing himself (2% shareholder / employee in S corporation) at $.60/mi for business mileage in his personal car.

What is the tax impact of this? I thought reimbursing at over the IRS standard rate resulted in income to the employee/shareholder, but I can't find this anywhere. Also, would just the excess over standard rate (i.e. $.095/mi) be considered income or the full $.60/mi.

I may be able to convince him to only reimburse himself at $.505/mi.

I see the mileage charged to customers as income & don't see any issues there. I recommended charging the IRS standard mileage rate and billing for travel time, but client said arrangement letters have already been signed.

[Jiggers]

Mileage paid & reimbursed > Std mileage rate

The excess amount over the standard IRS rate paid to himself will be taxable on his personal return.

I reimburse myself from my corporation at the IRS rate. Tax deductible by my business, tax free to me.

I bill my clients 10¢ per mile over the IRS rate, currently billing $0.605/mile. (0.505 + 0.10).

[BP.]

pub 463

Try here, esp. the chart in ch. 6:

http://www.irs.gov/pub/irs-pdf/p463.pdf

[KJ Judd]

Thanks! pp. 29-32 of the Publication are exactly what I need.