Discussion:Mileage Deduction

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Tax Questions --> Mileage Deduction


PDXCPA (talk|edits) said:

31 January 2006
Have a new client who is in construction and drives daily to job site which is about 210 miles round trip. Job sites change from month to month.

In reviewing his 2004 return I'm having a hard time supporting his mileage deduction as a Misc Deduction. Of course he wants the same for 2005. The issue that I see is that he only has one job and there is no permanent office. Is this mileage deductible?

DR BRISKET (talk|edits) said:

31 January 2006
Your client is merely commuting. Commuting expenses are non-deductible no matter how far he drives.

Riley2 (talk|edits) said:

1 February 2006
This question has been litigated to death. However, in my appellate court circuit, this deduction would be allowed. See CROWTHER v. COMM., 4 AFTR 2d 5295 (269 F.2d 292), (CA9).

PDXCPA (talk|edits) said:

1 February 2006
Can you provide a link to CROWTHER v. COMM., 4 AFTR 2d 5295 (269 F.2d 292), (CA9). Thank you for your help. I imagine this is an issue with quite a few taxpayers.

Mblatour (talk|edits) said:

2 February 2006
This question has come up for me as well. My husband works in the construction trade and several of his co-workers told him that their tax preparers although them to deduct mileage. These workers drive a hour and a half each way to our city to work; they work on different job sites, but the company they all work for is located in Duluth. They are guys that work in the field. A job they are on might last for 1 week, 2 months, 6 months, etc., until the job is done and they get sent to a new site.

One of the guys preparers said to him yesterday when he questioned if his mileage was still deductible, "do you still haul your hand tools in the back of your truck everyday to the jobsite?" , the worker replied, "yes", and the preparer (CPA for 30 years) replied, "then they are still deductible. This worker writes off nearly 30,000 in miles each year.

I say it's just commuting, but they all claim it's unreimbursed employee business expenses.

One guy went so far as he claims his mileage, and he drives a company truck from home to the jobsite, and back home again (an hour and a half each way). The company pays for the gas, maintenence, insurance, etc. I know this isn't legit, but so long as they find a preparer willing to do it, they do it.

My husband hauls his bucket of work tools in his truck to the jobsite each day so that they don't get stolen overnight (since the work outside on exterior's of buildings/sheet metal, and there is no where to keep them safe). We have never considered taking a mileage deduction. We live 20 miles from most of the jobsite's my husband gets sent to (the same jobs as these other guys are on), and we never take a mileage deduction. When my husband (and these guys) get sent out of town to say, a neighboring state, they drive and get paid "travel pay" & "subsistence" to cover the miles, gas, hotel, food, etc. based on a daily amount. They usually make money off of this because they rideshare, and share a motel room.

This area seems to leave so many questions. These fellows probably just figure it's on their preparer, not them. I don't know if they even keep a daily log, or just do a per day, this many miles equals so much calculation.

PDXCPA (talk|edits) said:

2 February 2006
I'm trying to find details of Crowther V. Comm. Riley2 says this is a case to support this situation. If deductible a daily log is required. IRS will throw the whole deduction out during an audit if there isn't a daily log.

DR BRISKET (talk|edits) said:

2 February 2006
Actually, it depends on the IRS agent. During one audit, my client had claimed over 35,000 business mileage in a sales job. But, he had no written mileage log. We convinced the auditor he drove that many miles by citing a few examples of where the client would drive during a week. The 35,000 mileage deduction was allowed--without a log.

TLF (talk|edits) said:

2 February 2006
I have a client with a similar situation. He is an engineer and belongs to a union. He works for several different companies each year, because he goes to the union office to see who is hiring. He travels alot of miles and a job can last a month or six months. He doesn't currently carry any tools to work, but wants to know if he buys a "Laser" and carries it to work if he would be considered a "traveling engineer" and be able to take a mileage deduction on a 2106? The companies he works for do not have an "office" to go to everyday.

Riley2 (talk|edits) said:

2 February 2006
The Crowther ruling was a Ninth Circuit Court of Appeals decision from 1959. This case involved a logger who went from site to site with no location as really a permanent location. The court ruled that the nature of his business was such that his tax home was his residence, not his place of work.

You should be able to find this case in CCH, RIA, BNA, or Klienrock. Or, you can go to any law library and find it.

Bell (talk|edits) said:

1 April 2007
This is such a hard-to-call area for me. I have a client that lives in a city 200 miles from the company that he works for. He has been assigned to a customer account that he has been commuting to everyday. The same customer every day for two years. He wants to take his mileage. Unless the parent company requires him to have a home office, I think these miles are commute. This is an employee. Not self employed. I wouldn't let him take the miles last year and he is asking again this year.

Bottom Line (talk|edits) said:

1 April 2007
400 miles of driving (200 miles each way) every day for the last two years and his employer is not reimbursing him? If my math is correct, he's got $12,500 of hard costs (gas) each year never mind the wear and tear on his car (100,000 miles per year) and his body (8 hours of driving each day)! I hope they're paying him VERY well. I don't think I'd do it.

Fsteincpa (talk|edits) said:

1 April 2007
Bell, for yor situation, it would fall under the guise of temporary employment site. Since client has been there longer than one year, it cannot be considered a temporary assignment and therefore it is commuting and not deductible.

In the practice I just bought, I have a number of contractors who all work together and they all came in with this commuting/deducting situation. I made sure they understood where the burdenof proof lies <with them>. In this instance, it is a little easier to accept because they do have an office here in town and I do let the employees know that they technically should be reporting to the main office and then all thereafter is deductible. These guys also wind up staying overnight many times and therefore want to deduct lodging as well. I tell them to make sure they have receipts. I'm thinking of having them sign a statement for me next year indicating they understand this concept so that if the Infernal Revenue Service does come knocking that they acknowledge that I told them what they must have in order to claim these deductions and the lack of this evidence is their problem, not mine.

I am comfortable letting them take this deduction because of the location of the home office here in town. I actually did check to make sure that the employees are required to pay their own lodging.

From a practical standpoint, the Crowther ruling does make actual sense. These guys are technically at the whimof their emplyers/unions and don't really have a choice as to job sites. It is the nature of their business and if I can argue the point, then I will.

Acctax (talk|edits) said:

1 April 2007
I agree with Bottom Line, its commutting plain & simple. I would not deduct either.

Dar

Fsteincpa (talk|edits) said:

1 April 2007
If we can argue it, we should take it. As long as the client is comfortable and is fully aware of all the consequences and is aware that the deduction may be taken away. understand that the tax position doesn't necessarily have to be 100% right, it just must be arguable and defensible. Hey, we win some and we lose some. Education of the client is the key to allowing the client to make an informed decision.

Please understand that I am not talking about taking an illegal deduction, but if i can make an argument for why I should be allowed to take it, then I will.

It is our job to try and reduce the tax liability for all of our clients in as a creatively legal way as we possibly can.

JMHO

PVVCPA (talk|edits) said:

April 1, 2007
Where is the Bible, I mean the Circular 230? We have to more than an arguable position. We also have to have a realistic expectation of winning the argument.

Fstein, I'm sure that's what you were saying, right?

Kevinh5 (talk|edits) said:

1 April 2007
I disagree. Not all of our clients want us to dabble in the grey areas. This one might, but many don't. It should always be up to the client to decide after listening to our advice (as long as you don't do anything you absolutely know won't pass the 1/3 test).

Bell (talk|edits) said:

1 April 2007
I just now got back to this. Let me redirect. His company is located in Columbia. He lives in Spartanburg where the customer is located. He drives about 66 miles round trip each day. This is not a temporary assignment. The company does not have a local office, but he does not have an office in the home. I keep telling him that if his employer requires him to work from his home, we can take an office in the home and deduct the mileage. If not, it is considered commute. The company does not reimburse him for mileage. Hope I have given all the facts needed.

Kevinh5 (talk|edits) said:

2 April 2007
Can't get temporary job assignment/location if it is expected to last (and in his case actually has lasted) over 1 year. Commuting. There is not a chance it would survive an audit. NONE. Not 1 in 3 but 0 in 1,000. For those taking it all the way to tax court, you've got about a 1 in 1,000,000 chance of succeeding. Maybe I'm being too generous.

Bell (talk|edits) said:

2 April 2007
Commuting it is. Thanks for all the help. Sometimes I get all twisted up in these commuting situations. At least I told him correctly.

Fsteincpa (talk|edits) said:

2 April 2007
i agreed and said it wasn't deductible. i went off on two different positions. if a temporary job site is expected to last less than one year, it is considered commuting. I did not say the individual above who was there two years could consider it commuting.

And now on to the other point, yes, I have to have some kind of realistic chance at winning the argument/case. And yes, if you read what i said, I talked about educating and informing the client of all possible outcomes, and then letting the client make the informed educated position.

what I think many people tend to do is to already pass judgement on some situations that may be gray. and may be defensible and arguable and we make the decisions for the client. My stance is to give the client the info and then let them decide what they want to do. Again, let me state that if they wish me to do something illegal, I will not do it. Seeing how far I can stretch those boundaries, damn right I'm gonna do that, but only if the client is fully informed and wishes to do that.

We should not be making those decisions for the client. That is not our job.

Kevinh5 (talk|edits) said:

2 April 2007
Fstein, on that I agree completely. Maybe I misread your prior point, but you and I agree on this one.

Death&Taxes (talk|edits) said:

2 April 2007
What is bothering me about this is that his tax home and place of business is his customer's office. In essence he is driving to work everyday not at his employer's but at his customer's place and now I wonder how often he visits his employer. As it stands, it is a commute to his job, but does he do all his work there? From where does he report to the main office. Does he go home and transmit papers by fax or attachment to Columbia? I have no idea but I do wonder.

Fsteincpa (talk|edits) said:

2 April 2007
I think there is no issue on the guy who is working at his client's office. It is an undeniable commute. the person know's it's a long term situation, therefore it is his choice to either live where he does or to move closer.

Bell (talk|edits) said:

2 April 2007
If he communicates with his employer, it is during the day while at the customer account.

Keithwin1 (talk|edits) said:

5 January 2008
i have a client (welder) who works 100% out of the union hall. assuming he doesnt spend more than 1 yr on any location, will his mileage be deductible going to/from the various work sites (sch A, unreimbursed business expenses)??

thanks!!

Death&Taxes (talk|edits) said:

5 January 2008
Read Discussion: Construction workers - deductible mileage especially the cases brought out by Kevin and myself

Szptax (talk|edits) said:

28 March 2008
S corp pays 2 employees an allowance of $50 per pay - mileage is reported, but the $50 is less than the mileage rate....my question is this - for the owner, who also receives this allowance, how might you handle it? UBE for Federal and what about PA?

To join in on this discussion, you must first log in.
Personal tools