Hair salon business in two cities under same name operated by the same person.

[singh]

Does any one know how I should handle Schedule C for the client who has Hair Salon in two different cities but used the same vehicle. Both businesses are under the same name. How do I input the mileage for the same vehicle for two different locations. She has 7000 miles for one and 4500 miles for the other location. The begining miles and ending miles are the same - 01/01/2019 and 12/31/2019.

The issue I am not able understand is that if I use two Schedule C then the "other" miles when added together from both schedules exceed the total miles for the year. Total miles driven was 20,000.

How should I enter the mileage for each business: Begining, Ending, business miles.

Thank you.

[sjrcpa]

How about entering 10,000 miles total for each business?

Or, put all on one business. Subtract the expenses calculated for the other business and input that amount as expense on the other business. EX: Total auto expense 8,200 computed for Sch C 1. Enter -3,000. Net 5,200.

Sch C 2 enter 3,000 auto expense.

Or, why are you using two Sch Cs?

[qbteachmt]

"She has 7000 miles for one and 4500 miles for the other location."

Are you asking about Business miles, but this person was commuting to their own business location?

[qbteachmt]

@singh 

Did you want to refer to Pub 463 for how to determine that perhaps none of this mileage can be reported as business miles? So far, you might have described only nonreportable commuting.

[singh]

Since the income and expenses are not the same for the two different locations so I I am thinking that 

I have to use two schedule C. On schedule C it asks for the LOCATION (address) of the business, and the two businesses are in two different cities (roughly 30 miles apart).

I am really confused as to what would be the best thing to do so she does not get audited.

[singh]

I was going to claim the business miles as she is claiming one room at her residence for business.

On California return I will use Itemise deduction instead of Standard deduction.

Thank you for your response to this issue.

[singh]

Thank you for your input, but I am still confused.

[qbteachmt · Accepted solution]

"she is claiming one room at her residence for business."

That needs to be its Exclusive use. It cannot be a home office that includes paying personal bills and doing personal tasks, or a shared space.

"but I am still confused"

What you have now described is found in Pub 587: "Principal Place of Business"

A lot of people think that if they are "in business" that makes all use of their vehicle a business write off, but the locations and trips have to qualify. The work being done at home needs to be principally done at home; that means is this salon work, admin work, or both. You have to determine if the Home Office is the only place this work is being performed, or not. Example:

"To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business."

The person likely has office space at one or both business locations, so is the home office Principal Admin Office for tax purposes? It's likely not going to qualify as salon space, since there are two business locations for that activity.

Or,

The person is a hair stylist and sees clients in both business locations, such as Mon-Wed-Fri in Location A and Tue-Thurs-Sat in Location B. That means all of this is commuting.

Or,

The person goes to Location A in the morning, then to Location B from Location A in the afternoon, and then home from Location B. That means home-to-Location A is commuting and Location B-to-home is commuting. The trips between the two locations are business miles, as would be supply runs.

What the person uses the Home Office for, what this person does at the business locations, and what is provided at the locations, helps determine if any of the trips from Home to any location, or location to Home, is other than commuting.

Good luck.

[singh]

Thank you so much, qbteachmt. Your detailed explanation is so useful for me. 

Thank you and have wonderful tax season next year.

[sjrcpa]

I just saw this. You have probably already filed. I would do one Schedule C. It is one business with two locations. For address, pick the primary location. The business address and 1 or 2 Sch Cs has very little to do with whether it gets audited.

You wouldn't do 2 corporate tax returns for a corporation with 2 business locations.