Happy
Presidents Day – when we celebrate 45 of the 46 Presidents of the United States,
and remember the damaging and potentially fatal mistake America made in 2016.
Time
for another perhaps controversial tax reform proposal.
I
love the Standard Mileage Allowance deduction for business, medical and
charitable auto travel. But . . .
The
standard mileage allowance for business use of the taxpayer’s personal auto should
NOT include a component for depreciation of the vehicle.
For
the most part taxpayers who use their car for business would own a car whether
or not one was needed for business. The business use, however extensive, is
basically secondary to personal use. I
have always owned a car. Although a
large percentage of my driving is for business, I own the car primarily for
personal reasons, and would own a car whether it was needed for business or
not.
Currently
the standard mileage rate for business is calculated using an annual study of
the fixed and variable costs of operating an automobile - including
depreciation, insurance, repairs and maintenance, tires, and gas and oil. The
rate for medical and moving purposes is based only on the base variable costs,
like gas and oil and does not include depreciation.
Because
the main reason for purchasing a car is personal and not business, depreciating
the cost of purchasing the car, based on business use, is not really a true
business expense. Only the business use
percentage of actual operating expenses should be allowed as a deduction –
because the more miles you drive the more you spend for gas, oil, repairs and
maintenance, tires, and insurance.
Taxpayers
using their car for business would continue to have the option of using the
appropriate business use percentage or actual expenses, but without
depreciation. Those who lease a car and
use it for business could also use the standard mileage allowance or actual
expenses, but this deduction would not include the monthly lease payment.
In
the case of motor vehicles legitimately used 100% in a business – trucks, vans,
limos, cars that are leased out to others (including one’s corporation) or used
exclusively by couriers or for deliveries – a deduction should be allowed for
100% of the actual costs of maintaining and operating the vehicle, including
depreciation. The standard mileage allowance would not be allowed here.
And
the Standard Mileage Allowance for charitable travel should be the same as that
calculated annually for medical and moving driving. The current deduction for charitable driving
is set by Congress and has been 14 cents per mile for many decades (except for
a couple of temporary increases in times of severe national emergency).
So,
as always, what do you think?
TTFN
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