Tax News

CCH (cch.taxgroup.com) reports:

The IRS has released the 2008 optional standard mileage rates to be used by employees, self-employed individuals, and other taxpayers to compute deductible costs of operating an automobile (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes.
Business Mileage Rate
The standard mileage rate for business mileage will be 50.5 cents per mile, an increase of two cents over the 2007 rate. When the standard business mileage rate of 50.5 cents is used for automobiles owned by the taxpayer, depreciation will be considered to have been allowed at a rate of 21 cents per mile. Such depreciation reduces the taxpayer's basis in the automobile.
The standard business mileage rate may not be used for automobiles used for hire (e.g., taxicabs), or when five or more automobiles are owned or leased and used simultaneously by the taxpayer (e.g., fleet operations). Rules providing for substantiation of an employee's ordinary and necessary expenses for local travel or transportation away from home are also provided. Such expenses will be deemed substantiated when the employer, its agent or a third-party provider provides a mileage allowance under a reimbursement or other expense allowance arrangement.
Medical and Moving Mileage Rate
The standard mileage rate for medical and moving expenses has been decreased to 19 cents per mile from 20 cents per mile in 2007.
Charitable Mileage Rate
The standard mileage rate for charitable purposes remains at 14 cents per mile.
CCH Comment. Many businesses have been waiting for the IRS to release the 2008 standard mileage rates so they can finalize their budgets for next year, managing member, Kossler Jones & Company, LLC, Fairfax, Va., and a member of the Virginia Society of Certified Public Accountants, told CCH. "It's a key number in their daily operations." Employers use the rate to reimburse employees for business miles driven and to learn the amount of their tax deduction.
"It would not surprise me if we have another mid-year change (in the rates) in 2008," Kossler added. He based his prediction on the steady increase in gasoline prices over 2007. "If gasoline hits $5 a gallon, we could see a mid-year change. "The last time the IRS made a mid-year change to the mileage rates was after Hurricane Katrina in 2005. Rev. Proc. 2006-49, I.R.B. 2006-47, 936, is superseded.
Rev. Proc. 2007-70, 2007FED ¶46,724
IR-2007-192, 2007FED ¶46,725
Other References:
Code Sec. 61
CCH Reference - 2007FED ¶1090.11
CCH Reference - 2007FED ¶5907.0325
Code Sec. 62
CCH Reference - 2007FED ¶6006.0324
Code Sec. 162
CCH Reference - 2007FED ¶8590.021
CCH Reference - 2007FED ¶8590.55
Code Sec. 170
CCH Reference - 2007FED ¶11,620.029
CCH Reference - 2007FED ¶11,620.6744
Code Sec. 213
CCH Reference - 2007FED ¶12,543.82
Code Sec. 217
CCH Reference - 2007FED ¶12,623.021
CCH Reference - 2007FED ¶12,623.11
Code Sec. 274
CCH Reference - 2007FED ¶14,417.043
CCH Reference - 2007FED ¶14,417.045
CCH Reference - 2007FED ¶14,417.046
CCH Reference - 2007FED ¶14,417.047
CCH Reference - 2007FED ¶14,417.048
CCH Reference - 2007FED ¶14,417.05
CCH Reference - 2007FED ¶14,417.051
CCH Reference - 2007FED ¶14,417.052
CCH Reference - 2007FED ¶14,417.053
CCH Reference - 2007FED ¶14,417.50
Code Sec. 1016
CCH Reference - 2007FED ¶29,412.385
Tax Research Consultant
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