No Mileage Log on Truck kills $53,625 §179 Deduction

[kcjenkins]

George Gist v Commissioner TC Summary Opinion 2009-126

The law is clear: Keep a mileage log or lose your vehicle deductions. The IRS says that you may keep an adequate record for part of a tax year and use that part-year record to substantiate your vehicle’s business use for the entire year.6 To use a sample record, you need to prove that your sample is representative of your use for the year.

By using your appointment book as the basis for your mileage, you not only build great businessuse proof, but you also do a great job of showing that your sample vehicle record mirrors your general appointments during the year.

The IRS illustrates two possible sampling methods:

1. One identical week each month (for example, the third week of each month)

2. Three consecutive months

The three-consecutive-months log requires only one start and one stop, and you are rewarded with nine months of mileage-log freedom. For this reason, the three-month log is the superior alternative.

Here are the basics of how the IRS describes the three-month test: Reg § 1.274-5T The taxpayer uses her vehicle for business use. She and other members of her family use the vehicle for personal use. The taxpayer keeps a mileage log for the first three months of the taxable year, and that log shows that she uses the vehicle 75 percent of the time for business. Invoices and paid bills show that her vehicle use is about the same throughout the year. According to this IRS regulation, this three-month sample is adequate to prove 75 percent business use.

Also remember to advise clients that the IRS authorization for a sample mileage log is for mileage only. The sample does not apply to your expenses for the vehicle. You need to track expenses for the entire year.

The mileage log is an absolute necessity when it comes to deducting your vehicles. You need a mileage log if you

• use actual expenses,

• use IRS mileage rates, or

• operate as a corporation.

http://www.taxalmanac.org/index.php/Reg._1.274-5T