Vehicle Expenses

[erchess]

I traveled today away from the general area of my main tax home in order to attend a continuing education event. First off, I wonder about the impact of the fact that I returned home before nightfall and will eventually sleep in my normal bed.

I spent seven dollars for breakfast.

I spent $91 to rent the SUV I drove.

I spent $41.51 on gas for the SUV.

I drove 184 miles in the SUV.

I am a Schedule C Filer so I obviously do not have any kind of accountable plan for my mileage expenses. Do I have any deductions here? I know that I cannot claim the mileage and the gas but can I claim the better of those plus rental or is it the greater of mileage and actual where actual includes both the rental and the gas? Finally, must I choose mileage or actual for all my business driving (I think so) rather than hopping around from trip to trip in one taxable year?

After the seminar I had lunch near the site of the continuing education. As it happened, my cousin treated me but if I had paid could I have deducted the cost of my meal? This was not a business lunch so I would have known better than to try to deduct my cousin's meal.

[FEDUKE404]

Some confusion here

If you think the $133 you spent for the rental SUV to drive somewhere that is more or less 90 miles away is both a necessary and reasonable expense, I would take it.

From the facts you cited, no meals.

One would assume you do not rent a SUV for your business travel for the rest of the taxable year, but perhaps use your personal vehicle? If so, with adequate records, you may wish to consider standard mileage rates for such travel.

FE

[erchess]

My Normal everyday vehicle

is a 1991 Ford F-150. It is old and slightly leaks oil and I don't think it is reasonable to go far out of town with it. I have AAA and the first 25 miles of a tow are free and the next 25 are pretty reasonable so I try to keep the thing within 50 miles of the repair shop I use. So for business or pleasure any time I go further than 50 miles from my shop (or maybe 52 from home) I get a rental vehicle. The Jeep Commando I had today had plenty of legroom lengthwise but it left my feet in each other's way and my legs painfully close together. and the steering wheel in its highest position low enough to be in the way when I got in or out. Therefore, my next rental will be a crew cab pickup because that is what the person at Enterprise recommended. when I shared my struggles with the Commando..That trip will take me 250 miles away for the period of 18-20 August and the truck will actually cost less than the SUV. So yes I think that for me as the owner of a very old vehicle and a very large body the expense was ordinary and necessary.

So as I sort of suspected the fact that I was not out of town overnight meant that none of the food would have been deductible. At one point in my planning I was going to spend tonight in the home of a my cousin in the town where I was.Had I done that would my meals have been deductible or would my deduction for the trip have gone out the window because of a significant amount of personal pleasure?

I assume that I could have taken the mileage rate at 50.05 cents per mile but would I then have had to give up BOTH the rental fee and the gas bill?

And by the way I do keep a mileage log and claim my relatively small amount of business mileage. I typically drive my own vehicle about 12K a year and of that 3 to 4 k end up being business. I am strict with myself and don't claim the whole trip unless it really is a round trip from my home office to the client's house and back with no personal stops. If I do anything personal on the trip I follow the rules as far as where the business travel ends. I almost always go straight from home to the client's home and then from there to the Y or shopping because I live a full 30 minutes from the closest stores that my family uses.

[snowbird]

Ok ... what is the catch or are you that bored ....
I looked at your profile ... your an EA... these are basic questions. But I will bite ... since I am bored! Assuming you got a hard nosed auditor ...

1. I would not take the crew cab pickup next time. The auditor would want to know what is necessry and reasonable about a crew cab pickup when you had nothing to haul but your ...

2. Your meals would only be deductable if the conference ran late ... the IRS says meal expenses are deductible only if your trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. The auditor might want to know why you could not drive for 2 hours after 5 pm. Now, if you talked to your cousin about doing his/her taxes, you could deduct 50% of both your meals ... better yet if you are doing the taxes and talk to the coursin about tax planning for the coming year. Still, a free lunch from your cousin is worth more than all the tax deductions for the meals! So your money ahead!

Did I pass the exam?

[erchess]

Not Bored

but tired and looking for confirmation of what I thought I remembered.

As for the crew cab truck, it appears to be the cheapest vehicle I can rent and drive comfortably. In particular it will cost less per day than I paid for the SUV. But this is precisely why I posted - to get other opinions the way I used to do when I worked for companies instead of on my own.

[SunTaxMan]

VEhicle type

So, what is wrong with renting a high mpg smaller car?

Why are you limited to either an SUV OR a crew cab truck?

[erchess]

Comfort

So, what is wrong with renting a high mpg smaller car?

Why are you limited to either an SUV OR a crew cab truck?

I stand six feet tall with legs being longer than average for that height and from my shoulders to my toes my body needs about 30 inches to be comfortable. I insist on being comfortable when I drive because I think that an uncomfortable driver is a danger to himself and the surrounding traffic.. In the Commando I had to struggle to use either the gas or the brake as opposed to both.

I could of course be equally comfortable in a full size car but the particular rental location I like to deal with doesn't have many of them and they are no cheaper than SUVs and trucks and I doubt they get better mileage. The trucks btw have short beds so that they are no longer than a standard truck. It would suit my needs just as well if they had standard cabs but that is not what the company offers.

This is opening another can of worms but if I ever fly commercially again I will fly first class because I found the coach seats uncomfortable the last time I flew. If I get audited and lose the deduction, so be it. I personally feel that since comfort while flying is not a safety issue, first class flying is less necessary than is driving in a roomy vehicle. However, after my flight in the cheap seats I needed several Chiropractic Adjustments which collectively cost me more than the money I saved by not flying first class so there is a health related claim here also. .

[JohnH]

I find it difficult to imagine that an auditor would ever question the size of the vehicle rented for a legitimate business trip under any circumstances. It's the validity of the trip that's important - not the size of the vehicle. Provided there is a business reason for the trip, the $10 - $30 difference between a small car and a large one is irrelevant. There's no requirement that you rent the cheapest thing possible in order to be entitled to the deduction. Although if this were the major issue that came up in an audit I would be grateful for the fact that the auditor has nothing else to focus on and is grabbing at straws. Same for the first class airfare. There are plenty of valid business reasons to fly first class, if for no other reason than you want to be fresh & rested when you arrive. Has anyone ever encountered an audit situation in which either issue arose?

I would take exception to one point which I have dealt with in the past. If a business meeting lasts until 4, 5, or 6 pm and the drive back home is a couple of hours, I'm taking the deduction for meals regardless of whether I stay overnight, because it's a trip that could reasonably be expected to last overnight. I agree it's a judgement call, but there's no way an auditor working 9-5 (including travel) would have any right to expect a taxpayer to conduct himself any differently.

[BHoffman]

However, after my flight in the cheap seats I needed several Chiropractic Adjustments which collectively cost me more than the money I saved by not flying first class so there is a health related claim here also. .

Also a good reason not to drink cheap Scotch

[erchess]

Another little point about my situation

I am not personally struggling financially any more than most middle class Americans but my business is small enough and my desire for tools large enough that I am just barely showing a profit at the end of my third year on my own. Therefore an auditor who found out I didn't mention on my return a several hundred dollar business trip that could have been a deduction might conclude that I was nefariously understating my expenses in order to have a higher profit and perhaps even pick up EIC. Therefore I make a point of keeping detailed records of all the expenses I have that are even arguably deductible or might look deductible but are not because a friend or relative treated me to the item. Those are still part of my "books" expenditures however.

[WhiteOleander]

Erchess will you be my client? I would much rather have too much documentation than too little.

[abby]

mileage

To focus on one point in your post:

I wouldn't take mileage on a rental car. I know mileage is allowed on a leased vehicle, but then the lessee is responsible for maintenance on the vehicle.

On a rental, you pay the rental fee and buy gas, but you are not putting wear and tear on the vehicle to your own cost - if you are charged for damages, then you could take that expense as well. You are renting someone else's equipment and the wear and tear and any depreciation is their expense.

[Gretel]

I really love this thread. It shows so perfectly how easy it is to judge someone and that, more often than we think, there is a good explanation that satisfies even our critical minds.

[joanmcq]

I would only take the rental fees and gas. I don't think mileage is appropriate; its a business travel expense just as if you flew somewhere on biz and then had to rent a car. You have the expense for the day whether you actually drive in any one day or not. The expense is not tied to the mileage, like use of a personal vehicle would be.

As far as what vehicle, you may want to test drive some smaller cars. My brother in law is 6'7" and over 300 lbs. When my sister met him, he was driving a Geo Metro. because of the set up of the dash etc, he will find smaller cars that fit him comfortable, whereas a larger one won't. For example, he could not find any minivans he could comfortably drive, but the Metro did fit him, as did the new VW Beetle, a Taurus wagon, and now a Honda Civic. My sister also picks cars based on whether they fit Bruce, and she has a Honda Fit, and she had the choice between that and the Smart car. Both fit Bruce, as does her Ford Escape. Although, seeing him climb out of the Metro was extremely amusing (and no one fit in the backseat when he was driving..)

For economy flights you can request a bulkhead or exit seat and get more legroom.

[DaveO]

Take Rental and Fuel

The mileage rate includes depreciation. Since you don't own the vehicle you are not entitled to that deduction.

As to the choice of vehicle as long as it's not unreasonable or extravagant I can't see that the service would have any say. If you rented a motor home or a Bentley there might be an issue. Besides an upgrade seldom costs much. I once reserved an ultra-compact car for two days on Hawaii. When I arrived at the car rental place they tried very hard to get me to buy an upgrade before finally admitting the only car they had left was a convertible Mustang.