Hypothetical business deduction

How much mystery shopping do you think you would need to do to write off mileage on a trip?

We are going to TN and I have two small shops. In the past, I have completed more shops, but still at most $200-$300 in reimbursements and pay. I have used the hotel as "home" and deducted mileage to the shops, at most a few miles.

How much do you think you would need to do to qualify something as a route or a trip?!?

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I imagine it would need to be enough that you could justify it if someone asked. If you’re just adding shops onto an existing trip, count the mileage that you took for each detour. Unless every location is right on the highway, those miles will add up.
I don't add a lot of miles when shopping while away from home, just the extra miles we travel to complete the shop. Having someone else cover dinner is nice. I was wondering what the dollar amount of reasonableness would be. In my mind, it would be a few hundred above breaking even after expenses.
@Niner wrote:

In my mind, it would be a few hundred above breaking even after expenses.

I don't know that you would have to break even if you are including a full mileage deduction. I do this occasionally on trips and I just use my "best judgement" to figure it out. If it's pretty close to a route I would have done anyway if I was bored or desperately needed work, or one that would have been profitable on it's own if I hadn't stated extra nights for vacating then I deduct it. If not I just do the additional miles.

There are reasons that a body stays in motion
At the moment only demons come to mind
The IRS uses this: Was the MAIN PURPOSE of the trip business?

If so, all costs deductible. (Excuse me; those deemed "personal" still are not deductible.)

If not, as the above poster said, mileage from your PRIMARY purpose to the shop and back is deductible.

Not kidding.

If the "main purpose" of the trip was to visit family or vacation, be VERY conservative in your deductions!

Edited 1 time(s). Last edit at 12/24/2019 01:57AM by ceasesmith.
That is kind of how I interpret it. If I was spending close to 8 hours a day at my final location mystery shopping for the days I was there I would think about deducting the entire trip but if all I did was a few shops here and there I would only deduct the mileage from where ever I was staying or got off the main road. I used to do hotel shops and string together three of them and would deduct the entire miles as those jobs were time consuming to do and I only drove from hotel to hotel with some minor visiting and sightseeing along the way but visiting would be for part of the day only so it was like taking the evening off from mystery shopping. I treated those as a route.
@Aquiest wrote:

You can't take a deduction for a hypothetical business.

So mystery shopping is a hypothetical business?
It's less about the number of shops than the purpose of the trip. If you take a road trip to see your Aunt Edna and pick up a few gas shops along the way, none of the mileage is deductible. But, if you plan a route of shops and decide that you can make a slight detour to visit your aunt, all of the shopping miles are deductible.

The IRS looks at the intent of the trip.

"Let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?” ~Walter Williams
@Niner wrote:

How would they even know the intent?

If you drove 300 miles to visit your aunt and complete $40 worth of shops, the intent is clearly visiting your aunt. 300 miles to make $40 is not anywhere close to making a profit.
@boridi wrote:

@Niner wrote:

How would they even know the intent?

If you drove 300 miles to visit your aunt and complete $40 worth of shops, the intent is clearly visiting your aunt. 300 miles to make $40 is not anywhere close to making a profit.

This is what I was wondering originally. Where is the cutoff? I had around $300 in shopping the last time we took this trip. I didn't claim mileage from home to the location or deduct anything besides mileage from the hotel to the location.
Trip Primarily for Business
You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination.

Example.

You work in Atlanta and take a business trip to New Orleans in May. Your business travel totals 900 miles round trip. On your way home, you stop in Mobile to visit your parents. You spend $2,165 for the 9 days you are away from home for travel, non-entertainment-related meals, lodging, and other travel expenses. If you hadn’t stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,633.50. You can deduct $1,633.50 for your trip, including the cost of round-trip transportation to and from New Orleans. The deduction for your non-entertainment related meals is subject to the 50% limit on meals mentioned earlier.


Trip Primarily for Personal Reasons
If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.

[www.irs.gov]

Edit: This doesn't directly answer the OP's question, I realize, but it helps put things in context. Personally, if it were a trip I would plan anyways expecting to make a profit (based on my actual vehicle cost of around 25 cents a mile and not the IRS rate,) I would deduct all the mileage except for personal side trips. If I did not remotely expect to make enough to cover my travel costs, I would only claim the expenses of business side trips (and maybe some of the hotel stays and meals.)

Edited 1 time(s). Last edit at 12/24/2019 07:09PM by mystery2me.
@Aquiest wrote:

You can't take a deduction for a hypothetical business.


So... Griffin's Widgets is out? Darn.

sestrahelena
If you are on vacation and do a few shops, you can deduct some expenses, as many have said. (And this was verified for my own information when I took a seminar for Realtors given by a tax attorney.) You can deduct the mileage for the shops, meals if you were on the road for the majority of the day performing those shops, and if you spend the majority of a full day on business purposes, you can deduct your lodging cost for just that one night. For example, you take a vacation and for four days are simply enjoying yourself. Your three nights of lodging is, of course, a personal expense. On the last day, you put together a route of shops and leave your hotel at 8 a.m. and get back 7 or 8 hours later. You can deduct mileage, lunch, and if you stay over one more night and head for home the next morning, that last night's stay as a business expense. It doesn't matter if the trip was taken primarily for personal reasons. You legitimately spent one day on business.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
You are not required to turn a profit each day or each hour. You can plan a business trip that explores a territory you may in future shop with gusto but take only sample shops to see what is there, spending the remaining time checking out lodging options, traffic patterns, and major consumer districts. This is true even if that leaves you with a financial wash or in the red. That's totally legit. Similarly, you can go to a seminar or convention that produces no direct income and write off the expenses for business purposes. It matters not that the location is near a relative or that it is in a warm climate in winter. if the primary purpose is to advance your business interests, it's legit to deduct the expenses.

Take a scheduler - or a friend / family member / acquaintance you hope to refer to an MSC for a bonus - to lunch and you can deduct at a higher percentage. Make sure to take notes about your business discussion at lunch.
@JustForFun wrote:

You can plan a business trip that explores a territory you may in future shop with gusto but take only sample shops to see what is there, spending the remaining time checking out lodging options, traffic patterns, and major consumer districts. This is true even if that leaves you with a financial wash or in the red. That's totally legit. Similarly, you can go to a seminar or convention that produces no direct income and write off the expenses for business purposes. It matters not that the location is near a relative or that it is in a warm climate in winter. if the primary purpose is to advance your business interests, it's legit to deduct the expenses.

Exactly! And even if the trip isn't primarily for business purposes, you can still deduct business-related expenses, as I mentioned. As a specific example, my family and I like to vacation at the Jersey shore every couple of years. Several years ago, when the real-estate market had crashed and prices were way down, I took a day while we were on vacation and toured several investment properties with another Realtor, since we were thinking of buying one, using it a couple of times a year, and renting it out the rest of the time. I was legitimately able to write off a number of expenses incurred on that day.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.
We actually met up with a realtor the last time we were in TN and looked at four investment properties. I did not deduct anything for that. We spent most of the day looking at the properties and meeting with the realtor.
@Niner wrote:

We actually met up with a realtor the last time we were in TN and looked at four investment properties. I did not deduct anything for that. We spent most of the day looking at the properties and meeting with the realtor.

In my case, I was a Realtor at the time. I would have handled the transaction as the buyer agent and gotten a commission had I purchased a property. So even though the property was for me, the time spent looking at properties was business activity.

In your case, unless you are/were a Realtor and/or had other investment property (i.e., were already in business as an investor/ landlord), I don't think you would have been able to take any deductions for looking at properties.

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.


Edited 1 time(s). Last edit at 12/26/2019 03:44PM by BirdyC.
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