It doesn't cost $70 per day to go 125 miles in a city. Otherwise my car with 59000 miles would have already costed me $33K in all expenses. It hasn't.
Further, this is what the IRS allows you to DEDUCT. So his taxable income is reduced by the 56 cents per mile - to the extent that his costs are less than 56 cents per mile, he is making more due to the tax-advantaged nature.
Also, at the end of the first year he can elect to either use per-mile deduction, or, the MACRS method, which may or may not give him an advantage (but he has to choose and use one or the other for subsequent tax years).
> It doesn't cost $70 per day to go 125 miles in a city. Otherwise my car with 59000 miles would have already costed me $33K in all expenses. It hasn't.
But remember to factor in depreciation and wear and tear on the car, in addition to all the gas and repair costs. If you're driving an old Toyota Yaris it'll be much less than 56 cents per mile. If it's a brand-new Mercedes S-Class you've financed, it's probably going to be more.
Further, this is what the IRS allows you to DEDUCT. So his taxable income is reduced by the 56 cents per mile - to the extent that his costs are less than 56 cents per mile, he is making more due to the tax-advantaged nature.
Also, at the end of the first year he can elect to either use per-mile deduction, or, the MACRS method, which may or may not give him an advantage (but he has to choose and use one or the other for subsequent tax years).