cost basis for sets and mileage

[cardkid]

Question for those who Lego as a small business.

 

does the mileage to buy a set affect the cost basis?

 

If i drive to a store (Target, Walmart) to look for clearance Legos but don't end up getting any does that count as a deduction for mileage?

 

thanks for the info. if this is posted somewhere else let me know.

[justafrog]

Question for those who Lego as a small business.

 

does the mileage to buy a set affect the cost basis?

 

If i drive to a store (Target, Walmart) to look for clearance Legos but don't end up getting any does that count as a deduction for mileage?

 

thanks for the info. if this is posted somewhere else let me know.

 

I count all business mileage as an expense, whether I'm successful in finding books and LEGO on a buying trip or not, but my failure rate is very low - most of the time I set out to buy books in a location, I buy books; ditto LEGO.

 

Forget about mileage for a moment and consider - it's a huge waste of time to drive around unsuccessfully too much - especially when it's so easy to find online deals requiring no driving at all, so I'm looking for pretty sure things if I get in the car to go hunting.

[binici]

Everything is and should be cost effective. Make the most of it. Time = money!

Once you start the flow and understand the how, when, where and why concept for LEGO investing you'll start to pinch your wallet.

[cardkid]

Appreciate the input. thanks justafrog and binici. I've been just going out when i have time to hunt. what about trips to other cities? for example a drive to another city but you stop at a target, toysrus, etc.  does the intent of the trip matter or just the fact that you went to a store?

 

thanks again

[justafrog]

Appreciate the input. thanks justafrog and binici. I've been just going out when i have time to hunt. what about trips to other cities? for example a drive to another city but you stop at a target, toysrus, etc.  does the intent of the trip matter or just the fact that you went to a store?

 

thanks again

 

It's a gray area, but if you're honest and keep good records you can make it pretty black and white. Proving intent is difficult so the IRS will give you some leeway and assume you're being honest, up to a point. If it becomes a track record that you're driving 90 miles and bringing home $30 of inventory regularly, they won't be amused.

 

I like to stay honest - if the trip is intended for business and pleasure 50/50, then I split the costs, including mileage, 50/50 and document why that's true. If it's 90/10 in favor of pleasure, I take only the very specific additional expenses for the 10 percent business (the mileage from my aunt's house to the nearest Target, rather than from my home to my aunt's nearest Target), and ditto if it's 90/10 in favor the business, I don't count the 10% of mileage to get from the four Kmart blowouts to meet my friend for lunch, but I count the other 90%.

 

Documenting how you do things and showing that when things should go in the IRS' favor they do, will keep you in good odor in the event of audit. When every mile on your car was, "Well, I was thinking about LEGO part of the time so it's a business expense", you're not going to find the IRS a sympathetic audience and they're going to move on to the orifice probe portion of the audit and spend a lot of time there.

[cardkid]

It's a gray area, but if you're honest and keep good records you can make it pretty black and white. Proving intent is difficult so the IRS will give you some leeway and assume you're being honest, up to a point. If it becomes a track record that you're driving 90 miles and bringing home $30 of inventory regularly, they won't be amused.

 

I like to stay honest - if the trip is intended for business and pleasure 50/50, then I split the costs, including mileage, 50/50 and document why that's true. If it's 90/10 in favor of pleasure, I take only the very specific additional expenses for the 10 percent business (the mileage from my aunt's house to the nearest Target, rather than from my home to my aunt's nearest Target), and ditto if it's 90/10 in favor the business, I don't count the 10% of mileage to get from the four Kmart blowouts to meet my friend for lunch, but I count the other 90%.

 

Documenting how you do things and showing that when things should go in the IRS' favor they do, will keep you in good odor in the event of audit. When every mile on your car was, "Well, I was thinking about LEGO part of the time so it's a business expense", you're not going to find the IRS a sympathetic audience and they're going to move on to the orifice probe portion of the audit and spend a lot of time there.

 

Awesome! thank you

[mcortez]

My significant other has been a tax professional for quite some time and what justafrog is saying is spot on.  Keep good records, be honest about what you're doing and generally if you get audited and you show the IRS agent your documentation you're good to go.

 

In my case I have basically 3 set routes for my LEGO investing:

 

* I have a rather long work commute, so once a week on my way home I go ahead and stop off at all the targets and walmarts along my commute to check their clearance aisles.  I just used google maps to find out what the mileage is from work to home, and than I setup a route that goes from work, through each of my regular stops, than to home.  I subtract the mileage I would have accrued anyway from the longer business route and log the difference as mileage.

 

* My other two routes are big loops out from my home, one in the opposite direction of my work.  The third is off to the side, basically I've got mountains to my west and metro to my ******, E, S -- the ****** is covered on my way home from work, the other two I have big loops that I can hit in a single morning or afternoon.  For the two non-work related loops, again I just used google maps to map a route and count that as the mileage each time I make those loops.  I usually hit them every other week, or whenever the daily deals explodes with info about a particularly good deal at Target, Kmart (or less often at TRU)

 

 

If making a business trip out of town for work, you can always use the two map routes trick to find out how much mileage you would have racked up without LEGO shopping and how much you did with the shopping, and just log the difference.  Also try not to mix purchases on your receipts -- if you see a bargain on beer and pretzels at walmart while picking up some clearance LEGO -- go ahead and ring them up separately so your LEGO purchases are on "clean" receipts.