Discussion:100% Business Use Vehicles
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Discussion Forum Index --> Basic Tax Questions --> 100% Business Use Vehicles
Discussion Forum Index --> Tax Questions --> 100% Business Use Vehicles
| 14 September 2009 | |
| This is the kind of client that makes me wonder why I chose to get into tax preparation. Sole proprietor, auto and truck repair. I had asked him to keep mileage logs to record more vehicle expense by using the standard mileage rate. This year he told me he couldn't do that, it's too hard to remember to record mileage every time he goes somewhere. He has three cars that he says are 100% business use. They are used for parts pickup and loaner vehicles for customers. The previous accountant (CPA) listed fuel under line 27 Other Expenses and car insurance in line 15 and didn't list the vehicle(s) on C or 4562. Is this an acceptable method? He has vehicle inspection records so he gives me the total miles per year for each vehicle. I don't want to take standard mileage rate on this because he doesn't have the log. Is it Ok to use fuel, insurance, and registration expenses without the log? I've found conflicting advice on this. What does everyone else do? Fire the client? | |
Death&Taxes (talk|edits) said: | 14 September 2009 |
| Pigs into hogs.....this is worse than one of mine who says 100% on one car because he is not deducting anything for the other cars that he also uses. And what his former person is doing is not ethical, trying to cover up the requirement to fill in the Schedule on the back of the Sch C. I've seen preparers do the same with home offices.
Of course, you can't use mileage because his former person used actual....in fact I think you should throw him back into the sea. | |
| 14 September 2009 | |
| Also, you can't take standard mileage if actual (fuel and insurance) were ever taken on these same cars. | |
| 14 September 2009 | |
| 'also' meaning that D&T just wrote that, but I hadn't read his complete response before typing my own. | |
| 14 September 2009 | |
| If it is any consolation, not taking depreciation on the cars (boy, what do we do when they are sold? that old 'allowed or allowable' argument again) might atone for any personal use. | |
| 14 September 2009 | |
| I have always thought that vehicle use is the prime topic for preparer ethics discussions. If the taxpayer says 'no records', but your software forces you to answer 'yes' to records and written in order to allow a deduction, what do you do? Lie on the return to get a deduction? Tell the client NO deduction because no written records? Refuse to prepare the return? My father would have called this 'being on the horns of a dilemma'. | |
| 14 September 2009 | |
| Having written that and having read your profile, how can you resolve this ethical dilemma without being hurt by those horns? | |
| 14 September 2009 | |
| Substantiating the business use of listed property appears to be the issue for the loaners. Since he does not have a log, he may have other documents, such as who he loaned the vehicles to. Even if you claimed 100% for fuel & other expenses, it does not show 100% business use.
maybe he can make an argument that his pick up is not listed property (grasp for straws). | |
Death&Taxes (talk|edits) said: | 14 September 2009 |
| I am not sure which is worse, the client's attitude or the old CPA's skullduggery. | |
| 15 September 2009 | |
| My software lets me take a deduction with a "no" on written evidence. Does anyone know what happens when you do that?
The client does have other vehicles available for personal use, so it's not inconceivable that these are 100% business. Does a 100% business vehicle always need a log? Farmers are allowed to take 75% on a business/personal vehicle without a log. <grasping for straws> | |
| 15 September 2009 | |
| It is not inconceivable that these are 100% business use. Especially given his profession and the fact that he has other vehicles which might or might not be an inventory of used but fixed up vehicles for sale. | |
| 15 September 2009 | |
| Ok, thanks everyone. I wanted to make sure I'm not missing an easy solution. Time for an ultimatum.
Client: It's too much trouble to keep a mileage log. Me: If you don't have a mileage log your taxes will be $X,000 higher. And if he goes looking for his old CPA then I'm freed up for more profitable pursuits. I'm thinking of developing an automatic GPS trip log that I can install in clients' vehicles and download at the end of the year. | |
