SCHEDULE C RETURN

[rose323]

A client bought three vehicles for his business, all cash 144k. He has 281,000 thousand miles calculated for all vehicles. He also has a fuel cost of 5k with receipts. What would be the best way to deduct his expenses? I have been calculating receipts for 3 hours 😞

[TaxGuyBill]

281,000 miles would have much more than $5000 of fuel cost.

And are there more than the three vehicles that he bought this year?  That would be a lot of miles for just three vehicles.  And I hope he told you the miles for each vehicle separately.

Did the client hire you to do his bookkeeping to add up receipts?  I hope you are charging him well for it.  Generally, for just the tax return, you ask the client the amounts and they need to give you the total amounts.

What types of vehicles and what are they used for?  Do they qualify for the Standard Mileage Rate, and if so, would that be beneficial?

[rose323]

He dumps waste from construction sites. Sorry, I meant he has three trucks and just bought three new ones totaling 144k

Im adding up all receipts for each category. He brought me ALOT of them 😞

I calculated the standard mileage rate, but this is where I am confused...

On line 9 schedule c Do I ADD the total cost of the trucks and the standard mileage rate with fuel? I think all these receipts have me overwhelmed I can't think right. 

[TaxGuyBill]

You use Actual Expenses (fuel, insurance, depreciation, repairs, etc.) *OR* the Standard Mileage Rate.

However, are you saying he now has a total of six vehicles?  If five or more are used at the same time, he does not qualify to use the Standard Mileage Rate.  So if that is the case, just forget about the Standard Mileage Rate.

So *IF* he can't use the Standard Mileage Rate, your only 'choices' are how to depreciate the new vehicles.  Bonus, 179, 200%DB, straight-line, etc.

My personal opinion:  Unless bookkeeping is your main business and tax just a minor aspect of it, you should not be adding up all of those receipts this time of year.  I would tell the client I would only do that in December, January, or file an extension and do it in May.  Or have him sort through them and add them up.  At any rate, be sure you are being paid well to add all of that up.

[IRonMaN]

You say “trucks” but you don’t say how big they are which could be a factor in whether or not you can use standard mileage rates vs actual costs,

[qbteachmt · Accepted solution]

"On line 9 schedule c Do I ADD the total cost of the trucks and the standard mileage rate with fuel?"

Have you done this before?

Vehicles are substantial purchases that have a useful life and are not "all gone" right away. That makes them Assets. Not Expense. Fuel, license, insurance, maintenance and supplies are examples of operating expense, because you use them up as you operate the vehicles. You cannot write off the purchase as Expense, because that vehicle is right there, still exists. Think of Asset as invested money, not Spent money.

Mileage allowance is the standard mileage rate for the use and operation of a vehicle when you don't need to detail the operating costs, for when the combined costs are taken into consideration by a mileage rate that covers it generically. For instance, mileage rate for operating a motorcycle for business is not the same rate as for a delivery van.

So, you really are asking about two separate things. Handling the new assets, and the already-owned assets. Then, handling the use of the assets - date placed in service, type of vehicle, weight, etc, are part of the IRS code for that type of vehicle as **bleep** groceries.

If you are doing the bookkeeping and not up to speed on these types of assets, you might want to pass this part to someone else. In this type of business, your client has a lot of $ riding on the correct treatment of their business vehicles.