The United States Court of Appeals for the Seventh Circuit has found that recurring annual state license and permit trucking fees, as well as annual insurance premiums, may be deducted as current expenses in the year paid. This deduction may be made although the useful life of the permits or insurance coverage extends into the next tax year, according to the American Trucking Associations (ATA).
The court held “that, for the particular kind of business expenses at issue in this case — fixed, one-year items where the benefit will never extend beyond that term, that are ordinary, necessary, and recurring expenses for the business in question — the balance of factors under the statute and regulations cuts in favor of treating them as deductible expenses.”
This decision affirms the validity of many motor carriers' practice of deducting these types of permit and license fees and insurance premiums. ATA filed an amicus brief supporting the carrier involved in the case.