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Old 02-14-2014, 10:59 AM
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Business miles not deductible?

Tell me if I'm interpreting this correctly.

I read that business mileage on personal vehicles cannot be deducted (standard method) unless the vehicle incurred business miles during the first year that you own the vehicle. For example: suppose a married couple own two vehicles (his & hers) The wife is a personal trainer and does a lot of driving to meet with clients. She keeps a mileage log and deducts the expense through her itemized Schedule-C. Then, a few years go by and she decides to borrow her husband's vehicle to attend a convention 1000 miles away. The 2000 mile drive was 100% for business purposes, but... if I'm reading the rule correctly, since they already owned the vehicle for more than a year before she used it for a business purpose, none of the miles driven for business purposes can be deducted. Is this true?!

If that is the case, anybody who starts a new business and has vehicles that they have already owned for more than a year will not be able to deduct business mileage without buying another vehicle to use in the business.

The next question is: does this same rule apply to employees/officers of S-corporations? Can the officer be reimbursed for business miles driven on his/her personal vehicle that he/she has owned for more than a year that he/she did not log business miles on during the vehicle's first year of ownership? And, if it is allowed, would it be reimbursed at the full standard rate and entitle the corporation to write off the reimbursement expense at that rate? (Usual substantiation would be expected, of course.)



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Old 02-14-2014, 09:27 PM
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Originally Posted by justthefacts View Post


#1;I read that business mileage on personal vehicles cannot be deducted (standard method) unless the vehicle incurred business miles during the first year that you own the vehicle. For example: suppose a married couple own two vehicles (his & hers) The wife is a personal trainer and does a lot of driving to meet with clients. She keeps a mileage log and deducts the expense through her itemized Schedule-C.


#2;Then, a few years go by and she decides to borrow her husband's vehicle to attend a convention 1000 miles away. The 2000 mile drive was 100% for business purposes, but... if I'm reading the rule correctly, since they already owned the vehicle for more than a year before she used it for a business purpose, none of the miles driven for business purposes can be deducted. Is this true?!

#3;If that is the case, anybody who starts a new business and has vehicles that they have already owned for more than a year will not be able to deduct business mileage without buying another vehicle to use in the business.

The next question is: does this same rule apply to employees/officers of S-corporations? Can the officer be reimbursed for business miles driven on his/her personal vehicle that he/she has owned for more than a year that he/she did not log business miles on during the vehicle's first year of ownership? And, if it is allowed, would it be reimbursed at the full standard rate and entitle the corporation to write off the reimbursement expense at that rate? (Usual substantiation would be expected, of course.)

#1;Correct as self emoployer, she needs to claim the dedcutions on Sch C of 1040. You can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method.note; tax law states, To use the standard mileage rate, you must own or lease the car and:
You must not operate five or more cars at the same time, as in a fleet operation, You must not have claimed a depreciation deduction for the car using any method other than straight-line, You must not have claimed a Section 179 deduction on the car,You must not have claimed the special depreciation allowance on the car, You must not have claimed actual expenses after 1997 for a car you lease, and You cannot be a rural mail carrier who received a "qualified reimbursement."

While you cannot take a deduction for non-work related travel or travel to and from your primary business location, you can deduct mileage-based expenses for all business-related commuting, even if your second office is at the coffee .You cannot deduct miles driven for other reasons even if you drove the same vehicle. The IRS requires you to take relatively straight routes from one location to another. An auditor may not allow you to claim side trips between two points if they added to the total length of your reported deductible use. You can deduct mileage driven for non-work reasons related to the business. This includes driving to the bank to make a deposit and meeting with professionals managing your biz. You will also need to estimate your annual expenses as part of your quarterly estimated income tax payments.To deduct mileage on your federal tax returns, you must keep records of your mileage. Your records must show the starting point, each stop on your trip and the total mileage.

#2; don’t think so; for example,a self-employer leasing a car for business use or use a leased car for business use can deduct either the standard mileage rate or actual expenses. Only the business percentage of the lease payment can be deducted.so You can, but you should claim actual expenses. You can't claim std mileage rate since it is your spouse’s car that you don't own


#3;As mentioned above



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