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View Full Version : Business Guys: Is Business Moving Expense Deductable in US



Paul Alciatore
03-20-2011, 09:40 PM
I am having trouble finding any references on the US IRS site on claiming business moving expenses. Does anybody have any experience with this.

I had my shop/business in a trailer in Iowa. I moved it to Texas. I would think that the expenses of this move would be a legit business expense, but where do I claim it? Or is it? Anybody know?

Your Old Dog
03-20-2011, 10:13 PM
Anything you do to improve your financial standing so that you can pay more taxes is tax deductible. You can deduct moving expenses if your job requires it. This is an opinion only and not a legal rendering :D I'm not looking to go to jail for giving legal advice !!

Mcgyver
03-20-2011, 10:25 PM
like YOD says, you really need advice specific to your situation, but as a general principal businesses are taxed on profit so legitimate expensive for the period are deducted before calculation of tax. The only area i can see there being a problem is if there was significant disbursement in renovating a building or such; these are likely not going to be viewed as expenses but capital items, so the need to be expensed (depreciated) over time. Really a Q for your accountant though if your not comfortable expensing it all

GKman
03-21-2011, 05:58 PM
Go ahead and deduct it and if you get audited just send 'em here.

Evan
03-21-2011, 06:44 PM
Everthing you need to know is in IRS publication 521 including the criteria for self employed persons.

http://www.irs.gov/pub/irs-pdf/p521.pdf

lazlo
03-21-2011, 07:33 PM
If you're not self-employed, moving expenses are deductible if your new job is at least 50 miles farther from your old home than the distance between your old home and your old job.
If you're self-employed, I would imagine you have to demonstrate a financial reason for the move.

But like GKman says, don't trust tax advice from a machinist forum :)

Paul Alciatore
03-21-2011, 08:08 PM
Nice try guys. Evan, that pub is all about PERSONAL moving expenses. I won't even try to deduct that as I have maintained my home in Texas for the past 20+ years and only had temporary quarters in Iowa. What I moved was my shop trailer. New tires, gas, etc. Seems to me that it should be a business expense, but where do I enter it?

I am on the line with IRS now. Third person that they transfered me to and been waiting about 25 minutes for him/her to pick up. I hate jazz music.

I guess I will get an answer soon. Or not.

Thanks anyway.

CCWKen
03-21-2011, 08:54 PM
If it is indeed a business expense, you had to make entries for the expenses somewhere in your books. Those accounts would be summarized on Schedule C. I would check with your accountant about how to create the accounts and charge the expenses. Are you using Accounting Software to keep your books?

jep24601
03-21-2011, 09:11 PM
Reminds me of when I rented office space and one day I asked the landlord, who had his own business on the premises, if something he was involved in was a business expense.
"John", he said to me, "when you've got your own business, everythings a business expense!"

Paul Alciatore
03-21-2011, 09:12 PM
If it is indeed a business expense, you had to make entries for the expenses somewhere in your books. Those accounts would be summarized on Schedule C. I would check with your accountant about how to create the accounts and charge the expenses. Are you using Accounting Software to keep your books?

Sorry, I am my accountant and my books are in Excel.

CCWKen
03-21-2011, 09:13 PM
Then what's the problem? :rolleyes:

Ken_Shea
03-21-2011, 09:53 PM
Tires for the shop trailer if it is a business asset would then be equipment repair and deductible.
If you deduct mileage as a business expense then the gas, insurance, vehicle maintenance etc is not deductible.

Evan
03-21-2011, 10:34 PM
Evan, that pub is all about PERSONAL moving expenses.

Nope, it specifically mentions self employed persons and moving their business.

When you are self employed in an unincorporated proprietorship personal expenses ARE business expenses.



Time Test for Self-Employed Persons

If you are self-employed, you must work full time for at least
39 weeks during the first 12 months and for a total of at
least 78 weeks during the first 24 months after you arrive in
the general area of your new job location (78-week test).
For purposes of the time test for self-employed persons,
the following three rules apply.

You count any full-time work you do either as an employee or as a self-employed person.


You do not have to work for the same employer or
be self-employed in the same trade or business for
the 78 weeks.

You must work within the same general commuting
area for all 78 weeks.

Self-employment.

You are self-employed if you work as
the sole owner of an unincorporated business or as a
partner in a partnership carrying on a business. You are
not considered self-employed if you are semi-retired, are a
part-time student, or work only a few hours each week.

mickeyf
03-21-2011, 10:41 PM
An accountant once told me "File aggressively."

Translation: if you don't claim it you have 0 chance of that deduction. If you do claim it you'll probably get it. At worst you'll be in the same situation you'd be in if you hadn't claimed it.

JoeFin
03-21-2011, 11:02 PM
Gawl Dern Right its Tax Deductable

This is 1 of things about Corps offshoreing manufacturing facilities that pisses me off to no end.

Not only do they get Write Down the liquidation of assets they sell off at the US Manufacturing facility. They also are allowed to Deduct the expenses associated with constructing new facilities in China. Write Down the cost of New Machinery in China - And MOVE massive amounts of cash assets offshore without penalty

If you or me John E. Taxpayer wanted to retire offshore and move the proceeds of our "Not so Long Ago Wall St Raided 401K" to another country we "Fortunately" are entitled to pay Capitol Gains on those funds

..

bborr01
03-22-2011, 09:25 AM
A friend of mine recently moved his shop to another location about a mile away from his old shop. Couple of cnc's, and all the support equipment including a 500 ton stamping press.

I have not asked him specifically, but I am fairly certain that he was able to deduct the moving expenses.

Of course, there may be a difference between a shop with employees and a one man "hobby shop".

If you are turning a profit and using moving expenses to offset "some" of the profit, you will attract a lot less attention from the tax authorities than someone who has not turned a profit.

Brian

paulsv
03-22-2011, 09:55 AM
The "time rule" cited above applies to personal moving expenses when you move your residence in connection with a business move. Business moving expenses are deductible under IRC Section 162 if they are "ordinary and necessary" business expenses. If you are moving for personal reasons (say retiring to Florida) they may not be ordinary and neceesary business expenses, but if you are moving for business reasons, they would be. As to where they are reported, you should be reporting income from a sole proprietorship on Schedule C to form 1040. New tires would go on the line for "Repairs and Maintenance." Fuel costs would go on the line for "Car and Truck Expenses," and so on. Some costs may have to be capitalized, if they constitute a permanent impprovement to capacity.

I have PM'd you an excerpt from a tax research source that I use, which covers the issue, generally.

CCWKen
03-22-2011, 05:24 PM
I don't think Paul has been using his shop tools in "a business" environment nor does moving the tools as personal property fit "moving expenses". Not knowing about Schedule C leads me to believe he's never filed income and expenses from business income nor attempted to capitalize any of the equipment. There's no history of the tools being used in a business. Since he is an accountant by profession, the shop tools are merely a hobby. The expense to retrieve the tools from out of state would be no different than an individual buying tools out of state and bringing them home. The expense is not deductible.

Unless Paul can show that the expenses to move the equipment is a continuation of moving personal property in a move from Iowa to Texas that initially fell under the moving expenses rule, the costs would not be deductible. After 20 years, it might be tough to prove continuation though.

Mcgyver
03-22-2011, 05:58 PM
Not only do they get Write Down the liquidation of assets they sell off at the US Manufacturing facility...

only if they sell items for less than their depreciated cost in which case its a legitimate loss. If they sell for more, there's a recapture and is added to taxable income. If they build a new building or buy machines those are depreciated (expensed) over time. The idea is that things of a capital nature, that have use/benefit longer than one accounting period (year), shouldn't be expensed 100% in the year they were bought but that their expensing should gradual over their economic life, ie depreciated. the 'why' is called the matching principal - income and expenses should be more or less matched within an accounting period. What's wrong with that?

goose
03-22-2011, 06:17 PM
I would think that the expenses of this move would be a legit business expense, ?


The answer is yes, with some provisos. If the cost of moving are substantial, (and hard to imagine they are not), and related to business as self employed or employee in your own corporation, then it's definitely worth hiring a professional tax accountant to handle your return.

As a matter of fact, I wouldn't even attempt a tax return for a business by myself.

Tax professionals are worth it,


Gary

(and keep your receipts!)