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The taxpayer is required to keep contemporaneous records to verify the mileage driven for business purposes. That must contain beginning and ending mileage for the period. Even if it is done on the method where by we measure the route once every month or so and record the number of trips we must still have the beginning and ending records. At that point we have all the relevant information, the total miles and the number of miles for business. The other is not used for anything. If he does have commuting miles it would be easy to estimate. He must substantiate the miles that he is taking a deduction for. 1
There are records of the business mileage that is being deducted. The problem is that the business use of the car did not begin until June and there are no mileage records before then (other than whatever the mechanic and tire store wrote when the car was serviced), so I do not know the non-business mileage from January through May.
(19 Nov '09, 02:32)
stephenweins...
If the busines use did not begin until June, the the personal and commuting miles only need to be "estimated" for June through December. (The car is deemed "placed in service" in June.)
(19 Nov '09, 04:20)
Brent Berkman
Yes, Brent is 100% correct; the in service date will show beginning mileage and ending mileage and the records only need to be kept following in service dates.
(19 Nov '09, 19:17)
SandySea
Business use began several years earlier (while a W-2 employer of another company), but was reimbursed through a qualified plan. Also, there was some prior use deducted as travel expenses for overnight business trips. June 2009 is the first month of use being deducted in a way that requires reporting of personal use, but not the first month of business use.
(27 Nov '09, 23:28)
stephenweins...
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Just a couple of comments.
There is no requirement to keep beginning & ending miles per trip. Many people have trip meters and use them instead. They should, however, note odometer reading at the beginning of the year (or use) and end. I always recommend to clients who work on their own vehicles that they get at least one oil change per year at a place that will note their odometer reading just in case of an audit.
One other thing I mention is that this is one expense that has been exempted from Cohen. If it is the first audit an auditor will allow reconstruction but if it is not (or they acknowledge knowing of the requirement but refuse to comply) and this issue has previously been audited they often will not & appeals has been known to uphold them on this. |
If the client is keeping a mileage log, ideally he should be logging everything. A contemporaneous handwritten log would weigh pretty heavily in any audit. The likelihood of any actual client doing that, however, is remote. I estimate their daily commuting mileage using Google maps, multiply by 5 days by 52 weeks less vacation and holidays, etc. Total mileage for the year I ask the client to estimate. It had better be reasonably more higher than the sum of the commuting and business miles. If the client has a lot of business miles and I want to take more care that the figures are accurate, I ask them to check their service receipts. (In a few cases, I've have them call the service station from my desk while I'm working on other parts of the return.)
Tom We actually have quite a few clients that keep good mileage records. We pound in into their heads that the IRS requires it and is not very forgiving when it comes to an audit. And recent court cases have been very strict. Do many get away with estimates? Of course. But mileage is one of the three big items we are supposed to exercise due diligence when preparing a return.
(19 Nov '09, 23:59)
AJ
The CDW was the only expense for the rental (except gas). The place fixing the taxpayer's regular car paid for the rental, but not the CDW or the gas.
(27 Nov '09, 23:30)
stephenweins...
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