Trucking expenses ?

[cientax]

Can the standard mileage rate be used for an OTR tractor/trailer driver?

I have never used the mileage but I have seen tax returns prepared by other preparers using the standard mileage rate. I thought only actual expenses could be deducted for OTR tractor/trailer (18 wheelers). The tractor is fully depreciated for this client and he wants to use mileage since his prior preparer did. Can it be done, LEGALLY?

[lsowers]

The firm I used to work for did quite a few OTR tax returns. We never used standard mileage, always actual expenses. From the Rev Proc listed below, you should find justification for that position. In section 4, notice it does not state trucks or tractors, only panel trucks. Also in section 5, an OTR truck is for hire. Also from section 5, you stated that the tractor was fully depreciated, if it was depreciated other than S/L, that would disqualify it from standard mileage.

From Kleinrock:

IRS Revenue Procedures

2007-70, 2007-50 I.R.B. 1162

SECTION 4. DEFINITIONS

.01 Standard mileage rate. The term "standard mileage rate" means the applicable amount provided by the Service for optional use by employees or self-employed individuals in computing the deductible costs of operating automobiles (including vans, pickups, or panel trucks) they own or lease for business purposes, or by taxpayers in computing the deductible costs of operating automobiles for charitable, medical, or moving expense purposes.

SECTION 5. BUSINESS STANDARD MILEAGE RATE

.06 Limitations.

(1) The business standard mileage rate may not be used to compute the deductible expenses of (a) automobiles used for hire, such as taxicabs, or ( five or more automobiles owned or leased by a taxpayer and used simultaneously (such as in fleet operations).

(3) The business standard mileage rate may not be used to compute the deductible expenses of an automobile for which the taxpayer has (a) claimed depreciation using a method other than straight-line for its estimated useful life, ( claimed a §179 deduction, (c ) claimed the special depreciation allowance under §168(k), or (d) used the Accelerated Cost Recovery System (ACRS) under former §168 or the Modified Accelerated Cost Recovery System (MACRS) under current §168. By using the business standard mileage rate, the taxpayer has elected to exclude the automobile (if owned) from MACRS pursuant to §168(f)(1). If, after using the business standard mileage rate, the taxpayer uses actual costs, the taxpayer must use straight-line depreciation for the automobile's remaining estimated useful life (subject to the applicable depreciation deduction limitations under §280F).

[kcjenkins]

No, standard mileage rate is not allowed for 'OTR' trucks, only for automobiles and light trucks. Nor would it make sense, because the operating costs on 18-wheelers are much higher than the operating costs on passenger cars and trucks.

[joanmcq]

KC is right. who in their right mind would WANT to use SMR for 18-wheelers? all expenses should be itemized and listed, mostly in 'other expenses', not under 'vehicle expenses'. And since OTR tractors are depreciated over 3 years, its unlikely using accelerated depreciation even makes any sense.

[mcb39]

Plus, don't forget the standard allowed daily meal allowance of ($52)?? per day for OTR Truckers. I know this is not included in mileage, but it is another BIG deduction along with Fuel, Repairs, etc. Mileage would never even come close to the expenses that most of these Owner/Operators have; even if it was allowed.

[rich]

KC is right. who in their right mind would WANT to use SMR for 18-wheelers? all expenses should be itemized and listed, mostly in 'other expenses', not under 'vehicle expenses'. And since OTR tractors are depreciated over 3 years, its unlikely using accelerated depreciation even makes any sense.

Isnt OTR Trucks 18 wheeler 5 year property for depreciation?

[kcjenkins]

NO. The tractor is 3 yr property, the trlr is 5 yr. Codes are V1 & V4.

[rich]

NO. The tractor is 3 yr property, the trlr is 5 yr. Codes are V1 & V4.

yes,u r right .i just checked the rev.rul. 2004-80 for truck/tractor definition. i was confused by heavy duty truck.

thanks

[joelgilb]

on the money KC, as always!