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Trucker Per Diem & 10% Ownership-Related Party Rule

Updated: Nov 29, 2023

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 and 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, which is a meals & incidentals expenses-only per diem.

  • Furthermore, it is section 4.04 that allows an Owner-Operator or a motor carrier that offers a company-sponsored per diem plan to deduct 80% of per diem.

    1. 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.

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Copyright 2022 Mark Sullivan Consulting, PLLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.


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