What is the best way to allocate gas expenses between a vehicle (for which a mileage deduction is taken) and equipment used on jobs?

[donna18ziehm]

My client is a landscaper and charged all his gas purchases on the business credit card but some gas was used for his truck (for which he takes mileage) and some was used for equipment.  What is the best way to allocate between the two?

[abctax55 · Accepted solution]

Based on receipts, and documentation from the CLIENT as to the amount used for the equipment?

Allocating isn't your job/responsibility.

[Happy-Tax]

If your client knows or can reasonably estimate how many miles per gallon his truck gets, a little bit of math will yield a result.

(1) He knows the total he spent for gas in 2018. (2) He knows how many miles he drove his truck since you indicated he has the inputs to be able to claim the standard mileage rate. (3) You can google the average cost of gasoline in 2018 in your part of the country. Where I live in the Southeast, gasoline averaged $2.40/gallon in 2018.

Now just do some calculations. Assume he drove 15,000 miles, and that his truck averages 15mpg. That means that his truck must have used 1,000 gallons of gas, which would have cost $2,400 in my area. Assume he spent a total of $3,000 for gas in 2018. This means that he must have used $600 of gas in his equipment. $600 divided by $2.40 = 250 gallons. That 250 gallons is what you would enter on Form 4136, yielding a fuel tax credit of $46.

You're pretty much home free if the client knows his miles per gallon for his truck.

[abctax55]

   You are awfully nice .. :+1: :smile: