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Imagine a person is driving for a ride share service such as Uber. He is at his favorite spot waiting for his next passenger. He then gets a passenger and drives the passenger where he/she wants to go.

With the app on, he drives back to his favorite spot to wait for a passenger. Is the cost of the return trip tax deductible? It sure seems to me that it should be but I was told it may not be.

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    You were told by whom? With what rationale?
    – littleadv
    Commented Oct 30, 2023 at 23:32
  • @littleadv A friend who drives for a ride sharing company. The rationale is that the person is driving for his benefit and therefore not tax deductible. For example, an Uber driver, drives to a store to buy food for himself. The cost of the trip to the store is not tax deductible.
    – Bob
    Commented Oct 30, 2023 at 23:45
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    "Is the cost of the return trip tax deductible?" what cost? gas and mileage?
    – D Stanley
    Commented Oct 31, 2023 at 0:08

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You can absolutely deduct any reasonable and ordinary expense as part of your trade or business. For a ride share/taxi, that includes and empty ride while looking for fare.

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The standard is are you using the expense with the intention to generate a profit. Clearly a taxi driver puts petrol in his taxi to transport people for a profit.

If you spend company money on a holiday for the CEO then that expense has nothing to do with turning a profit and thus does not reduce any tax burdens.

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  • Note to reader this post may be specific to my country. Your's may have a different standard.
    – Neil Meyer
    Commented Oct 31, 2023 at 10:09

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