How many miles did you run in 2021?

Gross Revenue = Sales - COGS (the cost of generating those sales)

How do you calculate your gross?
Gross = $122,000 - DH miles
OR
Gross = $122,000

IF you don't use COGS in your tax calculations, this may not apply to you...

Let's say on average, I have the industry standard of 30% DH miles. On my 40k paid miles, I generated $120k...that's $3 per mile. However the total miles driven with deadhead is 52k (40k + 30%). Now, those 12k miles for deadhead - how do you account for them? Where are these miles listed as (which line item) on your P&L? How do you determine what "value" to assign them? These miles generate a direct labor cost for those sales and from my understanding, that makes DH miles the cost of goods sold, by IRS definitions. Of course, this is assuming that as the owner of the company, it's company policy to pay the driver an hourly rate in addition to the discounted mileage rate.

From my understanding, I can't charge $3 per mile for DH mileage because it doesn't cost that much to operate the truck during that time and the IRS doesn't like you making up numbers to put on the spreadsheet, but the time and mileage must be accounted for.

So, if I just take the total miles into revenue, that's (122,000/52,000) 2.35 per mile...that means I would be reporting to the IRS that 12k DH miles cost my company $28,200 (12k miles * $2.35). You're still paying tax on that $28k... If you deduct that $28k from your sales as COGS, you'd be paying tax on $93,800 ($122,000 sales - $28,200 COGS).

Now, if I only use the loaded miles to calculate the average rate per mile (because they are legitimately the only miles you get paid for), it would look like: 12k DH miles times the RPM for paid miles ($3) = $36,000, so $122,000 - $36,000 = Gross Revenue of $86,000.

So, do you start tax calculations with $122k, $93.8k, or $86k listed as your gross revenue?

See how it depends on how you calculate your taxes? Personally, it cost me about $1.00 per mile to operate my truck. That's what can be charged to COGS. So, in reality, $122k - $12k (12,000 miles times $1 per mile operating costs) = $110,000 gross.

RPM is just a ratio and ratios are meant for comparison purposes only...when comparing apples to apples.

FYI to all: this thread was just really about how many miles you drove last year...not about who made what and all that. I only added my numbers from trucking (as I have other sources of income as well) to show sales and loaded miles. The truth is, if I didn't have to report $$ to Uncle Sam, I wouldn't keep books at all.

 

I think you and I are both talking about RPM and deadhead miles. However, I think you are considering RPM from a "rate" perspective. My perspective is from a tax "line item" perspective.

I totally understand that ALL miles are included when I offer a rate to take a load. I just offered $3985 to carry a load from Nashville to the middle of upstate NY, which is ~900 miles. That would equate to ~$4.43 per mile.

Now, I have to drive 90 miles to Nashville. I offered $3985, regardless of my operating costs or the rate per mile. My offer is a product of many, many variables. RPM is a product of my negotiating a rate, not the mileage. If I add in the DH miles, I'm at $4.03 per mile.

Now, let's look at the taxes:
Gross = Sales - COGS

Gross = $3985 - [(the cost to produce the sales) 90 miles @ $1.00 per mile operating cost + hourly driver rate]
Gross = $3985 - $90 - $150
Gross = $3745

But honestly, RPM and other variables don't matter at all, unless you're a number cruncher. I've driven from the SE to PNW for $6500 and I've driven the same roads for $8800. I doubt I'll be running that again anytime soon, but I'm just trying to show that at the end of the day, what matters is did you enjoy the road you were on today. Personally, I'll take a "cheaper" rate if I want to travel somewhere. I did that twice while on vacation last summer. I'm driving because I want to be, not because I care about keeping track of all the numbers...that's just for the IRS, but I don't want to give them anymore than I'm required to.