An office on wheels: RV tax breaks

An entrepreneur's query: Can I write off expenses for a roving business office?

Jim Fong, State College, Pa.
I am thinking about purchasing an RV to use as a business office as I travel around the country for a few months to gather information to write a book. Can I only write off the mileage, or can the purchase of the RV be depreciated just like any other vehicle? I certainly don’t want to draw the attention of an audit, and I want to do this honestly and ethically.

By Myrlande Davermann, Fortune Small Business contributor
Dear Jim: If you use an RV for legitimate business travel, it could be depreciated as business property, according to a representative from the National Society of Accountants – but as with any other business expense, to be deductible, it must be ordinary and necessary to your trade or business.

Where it starts to get complicated is when you begin considering the questions that the IRS is likely to ask you, says Tom Ochsenschlager, vice president of the American Institute of Certified Public Accountants.

Two questions to consider:

-Is this your primary residence? If you are not away from home, you don’t get to claim the RV as a business expense.

-Are you established as a writer? Can you justify why you had to travel to write this book? Have you met with publishers? The IRS will be looking for evidence that this is a viable business venture. Is this a serious moneymaking plan or is it a "hobby loss" – something done for pleasure?

You'll need to make a strong case if the IRS comes calling, and Ochsenschlager warns that the questioning may be intensive.

If you live in the RV most of the year, traveling around the country for work – as do traveling artists, who migrate around doing shows – you may have tax problems trying to write off your vehicle, according to the National Society of Accountants. You could get classified as an itinerant taxpayer. In that case, you do not get to deduct expenses related to being away from home, because in the IRS's eyes, you don't have a home tax base to be away from.

Without knowing all the facts of your individual situation, Ochsenschlager says your best bet is to keep very good records of what you are doing. As a start, keep a copy of the proposal for the book and all documentation related to the book's potential sale.

And above all: “Before you purchase the RV, you should seek out an accountant or tax advisor,” Ochsenschlager says.

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.