Just when you thought

[Corduroy Frog]

Yes, we all are amazed when we think we hear the "grand champion" idiocy from our clients.

I've got to think hard to wonder if I've heard anything like this before...

Client has a farm - has had for a few years. So this year he buys a 2024 FORD F450 truck. (Those of you who know anything about trucks know what a beast and expensive this thing is). Drives it 4000 miles for Farm Use only.

This is not a 1975 Ford F150, or a hay truck with a long bed. It is a Ford F450. Brand new. Didn't keep a log because he thought Farm Use only means that he didn't have to keep one.

Needless to say, I told him to take his taxes somewhere else.

[Max W]

You could have used actual expenses - gas, maintenance, insurance, etc.  This way it doesn't matter what the mileage was, if it was 100% farm use.

Then tell the client to keep a log from here on.

 

 

[jklcpa]

4 minutes ago, Max W said:

You could have used actual expenses - gas, maintenance, insurance, etc.  This way it doesn't matter what the mileage was, if it was 100% farm use.

Then tell the client to keep a log from here on.

 

 

But if the actual method is used in the first year, then the client must continue to use that and can't ever switch to cents-per-mile method.

[Lion EA]

And if he parks it at the house (commuting) or uses it to haul his daughter's furniture to her new apartment or stops at the grocery store on the way home or...he still better have a log to document biz/farm vs personal/commuting use.

[Abby Normal]

37 minutes ago, jklcpa said:

But if the actual method is used in the first year, then the client must continue to use that and can't ever switch to cents-per-mile method.

With low mileage and high vehicle cost, actual will likely be better until it's fully depreciated. But it's always a tough call.

[Corduroy Frog]

I thought it was so preposterous I didn't even go into the other methods.  There has to be concern as to whether such an expense is ordinary/necessary, and also whether we are being told the truth.

[Lion EA]

Our clients can spend their money foolishly. But their record-keeping better be accurate and organized, so I can make sense of what's deductible.

[Catherine]

On 4/11/2025 at 5:28 PM, Corduroy Frog said:

and also whether we are being told the truth.

The instant I think a client is not being truthful, they become an ex-client. That's a hard red line for me.

[schirallicpa]

You have to consider as well that a smaller truck cannot haul heavy trailers.  I have a client that has a nice 350 that I know is occasionally used for personal stuff (hauling the boat.) But if you consider how much a loaded trailer weighs when you load a piece of equipment on it thats weighing 20,000 lbs, you need a pretty big engine to move that thing, and stop that thing. Then add a few hills or mud, then he needs a big truck.  He needs to keep track of usage, but this kind of truck is basically a piece of equipment.  

I tell my farm and contractor clients to take pictures of the trucks hauling something heavy so when asked I can let the auditor from NYC know that this truck has a purpose. 

[JohnH]

On 4/11/2025 at 5:28 PM, Corduroy Frog said:

I thought it was so preposterous I didn't even go into the other methods.  There has to be concern as to whether such an expense is ordinary/necessary, and also whether we are being told the truth.

Client has probably been watching too many episodes of “Yellowstone”. Wants to project the Kevin Costner look when riding into town. Maybe wearing a logo vest as well? 
 
it’s probably good you passed on the engagement. Think about all the bad things that always happened when John Dutton didn’t get his way. It often ended with a trip to the “train station.” 

[mcb39]

Just saying!  I have never liked this rule.

[BulldogTom]

On 4/11/2025 at 4:28 PM, Corduroy Frog said:

I thought it was so preposterous I didn't even go into the other methods.  There has to be concern as to whether such an expense is ordinary/necessary, and also whether we are being told the truth.

If you think the client is lying, then by all means you should decline.  That is your call not mine.

I don't think a behemoth of a truck is preposterous for a ranch.   2 tons of feed in a trailer going up hill....on the freeway....at 70 mph.   It takes a truck.  A man sized, full power, get through the mud truck.   

I just wish we could plug in an app like the insurance companies do and at the end of they year it would spit out a mileage log so we don't have to guess where it was parked and driven.   

Maybe the next Acting Commissioner (fifth, sixth...I lost count) can make a rule that they have to have that device to get a mileage deduction... how cool would that be? 

Pipe dreaming Tom
Longview, TX

[Corduroy Frog]

On 4/18/2025 at 3:44 PM, BulldogTom said:

I don't think a behemoth of a truck is preposterous for a ranch.   2 tons of feed in a trailer going up hill....on the freeway....at 70 mph.   It takes a truck.  A man sized, full power, get through the mud truck. 
 

Over-the-road perhaps.  I walked away from a Ford F450 six-passenger which cost $109,000 brand new in 2024.  "Farm use only" does not imply interstate driving, although it could conceivably happen.

I'm not hand-picking the following just to prove a point.  It is a random sample of "Farm use only" Trucks

1984 1 ton Chevy Truck  (bought 1993 for $4800)  9 years old when bought

1970 1 ton Chevy Pickup  (bought 1982 for $2300)  12 years old when bought

1984 3/4 T Chevy Pickup  (bought 1992 for $4200)  8 years old when bought

1993 Chevy 1/2 T Van  (bought 2004 for $3300) 11 years old when bought

1992 Dodge Ram pickup (bought 2013 for $800) 21 years old when bought

An "extravagant" farm truck:  1993 Ford 4X4 (bought 1999 for $10,800), but a 4X4 is understandable.

There are several more but they are of similar ilk.

 

 

[BTS]

Well in our area all farmers drive big fancy trucks and run them into the ground hauling animals, feed, etc..  And they have to drive on the interstate to get places.   Not uncommon to spend over 1/2 million on a combine that comes stock with gps farming systems, ac and a descent sound systems.  Is that extravagant and doesn't meet deductible standards ?    Hell we have farmers with multiple thousands of acres.  Sell millions in crops and animals each year.  If I said you can not depreciate your 1/2 million combine with a stereo system or your Ford F450 extended cab with leather seats because they are too extravagant, I would get prodded with a pig sticker !!!!    If its not 100% farm use, give them a percentage.  

[Corduroy Frog]

Not entirely averse to your message from Ohio - large farms in the midwest.  I do have a few farmers with $2 million in equipment and annual repair costs that are huge.  These guys have to have $150,000 in annual revenue just to break even.  Ohio is perhaps the easternmost area of the "farm belt" extending from there to the Dakotas with huge farms.  A "large farm" in the Southeast can be 100 acres.  The Ford F450 I wouldn't allow was on a "farm" of 32 acres, with the owner having a full time job.

[jklcpa]

Now that the convo seems to have exhausted and concluded, I found this funny clip about those farm trucks. It is a Facebook clip, so I'm sorry that those of you not on that platform won't be able to see it.

https://www.facebook.com/share/r/16AqLmzUXp/?mibextid=D5vuiz

 

[Corduroy Frog]

Yes, I've concluded about that case after several great comments.

However, I'll bet almost ALL of you have men (mostly) who have spent huge money on a Honking new truck, and then drag into your office expecting the IRS to pay for the thing.

They are crestfallen when told they can take only minimal depreciation and even then have to support the deduction with mileage records.

What's worse, if they choose "actual" expenses, they are stuck with it for the life of the truck.  They cannot switch to the mileage method in future years, when "actual" expenses will be less.