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Vehicle as a Business Expense

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  • Avatar IRdoc 
    Participant
    Status: Physician
    Posts: 34
    Joined: 01/10/2016

    Johanna,

    As always thanks for your reply.  I guess i’m confused on the fact based off the “wheel” on Figure 26-B (https://www.whitecoatinvestor.com/business-mileage-the-holy-grail-of-tax-deductions/), where it clearly states travel between main job and second job (and vice versa as implied by the bidirectional arrow) is always deductible.  Can you explain that.

    Alternatively, I have a home office in which I view PACS and make decisions on call cases, sign reports, answer calls from home and interpret appropriate patient workup for both inpatients and outpatient consults.  Would that pass the muster?

    Thanks

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    #180146 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7511
    Joined: 01/09/2016

    Of course, you’re welcome.

    The wheel cut off at the bottom and I’m not sure if it had any relevant information. The point I’m making is that you cannot use travel to your side gig trip to convert commuting miles to business miles. I used to have a reference for this but (and I apologize) I do not have time to research. Perhaps @spiritrider will step in (perhaps he will prove me wrong?- won’t be the first time!)

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #180149 Reply
    Avatar Raster 
    Participant
    Status: Physician
    Posts: 39
    Joined: 02/01/2016
    Would this arrangement pass muster with an audit?
    My practice buys or leases me a car. I leave the car parked permanently at the main office location.  On days I travel to one of our other clinics, I commute to the main office (via my personal car, bike, or jogging) then get into my practice owned or leased vehicle and drive to one of our three peripheral clinics, between 30 and 90 miles from the main office. After completing clinic at the peripheral office, I drive back to the main office, park the work car, and commute home via personal vehicle, bike or foot.  I realize I will have to keep good records of all trips.  I will continue to own a family vehicle or two.
    Will all the use between the main office and the peripheral offices be deductible?
    Could I be hassled about a business reason I went to the main office?  (“Why did you not just drive your personal car straight to the peripheral office?”). I may have patients or meetings or other things to do at the main office before or after traveling to the peripheral offices, but would prefer not having to document that (HIPAA etc).
    #180885 Reply
    Avatar IRdoc 
    Participant
    Status: Physician
    Posts: 34
    Joined: 01/10/2016

    Sounds legit to me

    #180889 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7511
    Joined: 01/09/2016
    Will all the use between the main office and the peripheral offices be deductible? Could I be hassled about a business reason I went to the main office?  (“Why did you not just drive your personal car straight to the peripheral office?”). I may have patients or meetings or other things to do at the main office before or after traveling to the peripheral offices, but would prefer not having to document that

    Click to expand…

    Please clarify – if the practice provides a car for you, what OOP expenses are there to w/o? Also, are you an employee of the practice?

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #180925 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2306
    Joined: 09/18/2018

    The problem is two fold:
    1) Ordinary and necessary for the business deduction.
    2) Segregating business from personal.

    Perks are taxable unless you prove 1). Company cars used to be a common perk. Owned, maintained and insured. That is why the usage is so important.
    Rate x miles = ordinary amount.
    You can charge for business and get reimbursed (only excess of commute). The company has to prove that owning a car was ordinary and necessary. That could be disallowed. Typically, special customization is needed for normal vehicles or it is a tool in the business. Like Uber or covering a route. The burden of proof is on you.

    In an audit, transportation and home office expenses are natural targets. You may win your “bike” or “jog” commute. How would you document it? Maybe a log?
    Bike, jog, personal car? It’s tough to prove you didn’t use the car. Do you have showers in the office might be the follow up question.
    That’s why business mileage in excess of commute is the normal documentation.

    #180943 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 789
    Joined: 03/18/2017

    DarrVao How much telemedicine are you doing? I still don’t get how that holds up. You would have to be doing more telemedicine than regular medicine for the home office to be the primary right? Seems very unlikely. I realize the post is from over 2 years ago.

    I can’t imagine any physician where their home office is their primary source of business. Maybe teleradiology because that’s actually all you do, but Im not sure such jobs exist for other fields.

    #180944 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 789
    Joined: 03/18/2017

    Johanna,

    As always thanks for your reply.  I guess i’m confused on the fact based off the “wheel” on Figure 26-B (https://www.whitecoatinvestor.com/business-mileage-the-holy-grail-of-tax-deductions/), where it clearly states travel between main job and second job (and vice versa as implied by the bidirectional arrow) is always deductible.  Can you explain that.

    Alternatively, I have a home office in which I view PACS and make decisions on call cases, sign reports, answer calls from home and interpret appropriate patient workup for both inpatients and outpatient consults.  Would that pass the muster?

    Thanks

    Click to expand…

    You’re an IR doc. can you embolize stuff from home?  every doc can view notes, write notes etc at home, it doesn’t make it their primary place of work.

    I don’t think it would pass personally.

    #180945 Reply
    Avatar Raster 
    Participant
    Status: Physician
    Posts: 39
    Joined: 02/01/2016
    Will all the use between the main office and the peripheral offices be deductible? Could I be hassled about a business reason I went to the main office?  (“Why did you not just drive your personal car straight to the peripheral office?”). I may have patients or meetings or other things to do at the main office before or after traveling to the peripheral offices, but would prefer not having to document that 

    Click to expand…

    Please clarify – if the practice provides a car for you, what OOP expenses are there to w/o? Also, are you an employee of the practice?

    Click to expand…

    There would be nothing on my personal return to write off I suppose, I just don’t want there to be a problem for my business calling it a business expense.  I am a partner in the practice.

    My commute is less than 0.3 miles, and yes, we have a shower.

     

    #181133 Reply
    Avatar BruinBones 
    Participant
    Status: Physician
    Posts: 12
    Joined: 05/21/2018

    Thank you, Johanna. Based on your explanation of the accountable plan, I recently decided to ask reimbursement for my commuting costs (over 200 miles a week) for my hospital employment, and it was added to my contract! As stated by another poster earlier, you don’t know if you don’t ask! The worse they could say is no.

    #182108 Reply
    Liked by jfoxcpacfp, Tim
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2306
    Joined: 09/18/2018

    @bruinbones,
    Try reimbursement for 2018 as your first.
    .545*200=$109/wk Congratulations. Close to $5k tax free. Johanna deserves some flowers at least.

    #182117 Reply
    Liked by jfoxcpacfp

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