Listed property

[Pacun]

"QUESTION:

My CPA says there is no such thing as a $75 rule for receipts on vehicle expenses. He says I need receipts for all my car expenses.

Can you give me the rule that says I do not need receipts if the vehicle expense is less than $75? (J. L., San Francisco, CA)

ANSWER:

and the best explanation of what this rule says is found in IRS notice 95-50, which states that the $75 rule applies to travel, entertainment, gifts, and listed property.

IRC section 280F(d)(4) states the "listed property" includes any passenger automobile and any other property used as a means of transportation.

Explicitly, this means that your vehicle is listed property; therefore, you do not need a receipt for a vehicle expense that is less than $75.

Keep one key point in mind: Tax law requires proof even when the law says you don't need a receipt. So, always think proof. If you don't have receipts, do your gas expenses help prove your mileage and does your mileage help prove your gas expenses? Do you jot down the cost of gas on a timely basis? The IRS gives you up to one week for this timely test."

Can someone elaborate or comment on this?

[rfassett]

"Keep one key point in mind: Tax law requires proof even when the law says you don't need a receipt. So, always think proof. If you don't have receipts, do your gas expenses help prove your mileage and does your mileage help prove your gas expenses? Do you jot down the cost of gas on a timely basis?"

There is your elaboration. The CPA is simply acknowledging that, for all practical purposes, the $75 rule has no substance. You still have to be able to prove your deductions.

[jainen]

>>IRS notice 95-50, which states that the $75 rule applies to travel, entertainment, gifts, and listed property<<

No, it does not state that. The notice only states that the IRS intended to amend the regulations relating to that issue. The actual regulation, 1.274-5, came out as "documentary evidence, such as receipts, paid bills, or similar evidence sufficient to support an expenditure, is required for... Any other expenditure of $75 or more except, for transportation charges, documentary evidence will not be required if not readily available."

That's why your CPA says vehicle expense is specifically excluded from the $75 rule. And even if you somehow read that as saying "receipts, paid bills, or similar evidence" are not required, it does not change the overall requirement for a contemporaneous record such as a log book.