Discussion:Mileage Deduction for 1099 Contractor

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Discussion Forum Index --> Tax Questions --> Mileage Deduction for 1099 Contractor

UNC-CPA (talk|edits) said:

17 February 2011
I have reviewed a lot of discussions about deductible and non-deductible mileage, but I remain unsure as to the proper treatment in the following situation:

TP is a 1099 consultant and typically takes assignments ranging from 6+ months. Most jobs are outside of TP's tax-home and clients will reimburse TP for travel expenses. TP is taking an assignment in his tax-home metro-area and will be driving to the client location on workdays. TP is a disregarded LLC; doesn't qualify for office-in-home but invoices client, tracks income/expense, and lines up new assignments from home; does not have a permanent business location besides the home; and only has 1 client at a time. TP wants to deduct mileage from home to client.

If the TP was a W-2 employee driving to his employer, I believe these would be non-deductible commuting miles. Likewise, if TP had an office elsewhere, the first/last of day would be commuting. But neither is the case.

Rev. Ruling 99-7 #3 says that mileage is deductible from the TP's residence if the residence is the Principal Place of Business, as defined by IRC 280A(c(1(A). IRC 280A(c(1(A) says that Principal Place of Business " includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business."

I believe that invoicing, tracking income/expense, planning assignments, etc are administrative/management activities and thus the residence is the PPOB. And if PPOB, then mileage to client is deductible.

Kevinh5 (talk|edits) said:

17 February 2011
What is your question?

UNC-CPA (talk|edits) said:

17 February 2011
The question is, are the daily trips to the client deductible by the TP?

Solomon (talk|edits) said:

17 February 2011
Seems so.

Szptax (talk|edits) said:

18 February 2011
gee I hope so, or I have some amended returns to do! (Not to be confused with any other amended returns I have discussed on this board.)

Ddoshan (talk|edits) said:

18 February 2011
As in the past I do not necessarily agree that his mileage would be deductible in the scenario described. And for the sake of my sanity that is the position I take in these particular situations. No regular-exclusive use cannot be your principal place of business thus no mileage deduction.

Also, based on the post it does not sound like he really has a lot to do at home anyway. At least not enough to justify such a classification. Sounds like he could do the things described in a few hours a month.

KeithR (talk|edits) said:

18 February 2011
Before thinking about whether mileage is deductible did you think about the badges of trade?

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