Can loan truck payments be deducted in Schedule C for an LLC ?(Trucking Company)

[ddh2020]

One of my clients owns trucking company (LLC) so hes filing Schedule C and including all his deductions as part of his return.  He mainly has on deductions since he recently started operating in September last year.  He's purchased 2 trucks (17k lbs each) and has given a down payment of $8k per truck, as well monthly car payments on his newly acquired trucks totaling aproximately $10k.  His income was $106k for the year.

He states that no other deductions were incurred for 2018 and the above are the only 2 deductions he had.  Can payments on this loan or the down payments be included in schedule C (and if so, which line on the form)? I'm already depreciating both trucks for this year.

Thank you.

[abctax55 · Accepted solution]

Loan payments are not deductible.  The interest on the loan is (times the business percentage of use of vehicles).  Neither are the down payments.

You capitalize and depreciate the entire purchase price of the asset, not just the down payments (your question isn't clear as to the amount capitalized/depreciated).

Why are there no expenses of operating the trucks (at least gasoline...).

I think you need to provide more detail.  Something doesn't quite add up.

[Just-Lisa-Now-]

Agreed, working 2 trucks for 4 months of the year has to have some other kinds of expenses....even if the trucks just sat there, they have to have insurance on them.

[IRonMaN]

Depreciating the trucks and wanting to deduct the payments on the loan used to purchase the trucks?  Isn’t that double dipping?  Why are you thinking you could do that?

[dd4vols]

also... it would have to be a single member LLC to be reported on Schedule C.  More than one member, even if  1% other owner, would require the Form 1065 likely

[ddh2020]

thank you all for your responses.  I am depreciating 2 trucks using the SL method for a period of 5 years.  Trucks were purchased in September 2018. The trucks cost basis is $46k each, weight is 17lbs each.  Proseries is calculating $9200 total depreciation for this year. I understand now how i will be double dipping, i would like to make sure I'm computing depreciation correctly.

Yes it is a single member LLC.

I will ask him about fuel, he didnt mention anything else.

thanks

[Just-Lisa-Now-]

Fuel, registration, insurance, permits, log books, etc....in CA there a bunch of other costs that truck drivers have just to be able to have a license to be able to drive a big rig....you need to hammer that guy for more stuff.

[IRonMaN]

Truck drives have all of those expenses.  But he may not have all of those if he in turn has "independent contractors" driving the trucks for him.

[ddh2020]

So he did file 1099s for 2 drivers which are classified as "Independed Contractors".  Does that mean that he cannot deduct fuel or toll expenses even thought hes the person who paid for this as the LLC owner?

[IRonMaN]

Whatever he paid for his is deduction.

[ddh2020]

Thank you. I don't he actually drove either truck.  He just owns the LLC 😞

[IRonMaN]

You betcha!

[sjrcpa]

"weight is 17lbs each"  Those are expensive toy trucks. :smirk:

[IRonMaN]

But if you are only paying in "k"s instead of dollars, they are still cheap. :smile:

[dd4vols]

I  would be very leery of the "independent contractor" situation.  If he owns the trucks, and they are truly independent, they should be paying him rent or lease.  If he tells them where to go, schedules their trips, etc, then they are most likely employees, and he is trying to circumvent the payroll tax burden.   Sometimes, it's better to NOT do every return that someone brings in.

[garman22]

17lbs....that is a heavy toy though. Super expensive. :laughing:

[ironmom]

Are you saying that you can take depreciation on a truck (in my case a log truck) and take the interest payments as well?

[abctax55]

Ummm  yes.  Why wouldn't you be able to?

[ironmom]

Ok - silly question I know - and I already knew the answer.  Blame it on my always questioning things when I don't need to:(   I very much appreciate you taking the time to answer though!

[abctax55]

I'm sure you don't ask such silly questions EXCEPT on April 4-5-6, etc .....  We are all semi-brain dead.:smiley: