Trucker Per Diem & The 10% Ownership-Related Party Rule
Trucker Per Diem & the 10% Ownership-Related Party Rule. Can an Owner-Operator claim trucker per diem under the related party rule if they own more than 10% of the company? Yes.
The 10% ownership - related party rule and per diem creates much confusion and is frequently misunderstood by both drivers and tax practitioners alike. Under the related party rule an Owner-Operator can claim substantiated meals & incidental expenses-only per diem even if they own 10% or more of the trucking company. Based on the foregoing the related party rule does not apply to the trucking industry.
Related Party Rule
- The 10% ownership-related party rule is intended to prohibit 10% owners and self-employed individuals from using per diem to claim lodging expenses. The rule is found in IRS Rev. Proc 2011-47 section 6.07 - Limitations & Special Rules
- Applies exclusively to per diem that includes lodging, meals & incidental expenses under Section 4.01 and 5 (High-Low Method).
- The related party rule does not apply to trucker per diem under Section 4.04 - Special Rules for Transportation Industry,
- Trucker per diem is a meals & incidentals expenses-only per diem.
- Furthermore, it is section 4.04 that allows an Owner-Operator to deduct 80% of per diem.
- The 80% limitation also applies to a motor carrier that offers a company-sponsored per diem plan
- The tax deductibility of per diem is limited to 50% for the other substantiated per diem options governed by Section 4.01 and 5 of Rev. Proc. 2011-47.
Per Diem Substantiation Method - Special Rules for the Transportation Industry
Section 4.04 applies to:
- A payor that pays a per diem allowance only for meal and incidental expenses for travel away from home to an employee in the transportation industry and computes the amount under section 4.02, or
- A self-employed individual (owner-operator) in the transportation industry who computes the deductible amount for meal and incidental expenses for travel away from home under section 4.03.
Limitations and Special Rules
Section 6.07 applies to:
- Related parties.
- Sections 4.01 and 5 of this revenue procedure do not apply if a payor and an employee are related within the meaning of 267(b), but for this purpose the percentage of ownership interest referred to in 267(b)(2) is 10 percent.
- Section 4.01 and 5 are for per diem that includes lodging, meals and incidental expenses.
Drivers, try Per Diem Plus or Small Fleets absolutely free for 30 days!
PDP Small Fleets requires users to complete the account setup HERE before using the app.
About Per Diem Plus
About the Author
Mark W. Sullivan, EA founded Sullivan Consulting in 1998 in St. Louis, MO and relocated to Scottsdale, AZ in 2020. He leads the Tax Controversy practice at Price Kong, CPAs & Consultants and specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.
Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.. Contact Mark W. Sullivan, EA
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Copyright 2023-2025 Price Kong, CPAs & Consultants, PC; Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
