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Track Those Miles (properly!)

Here's why it's SO important to keep accurate records including NOTES about mileage. These days there are some great apps that make it so easy!

Check out this recent article from the AIPB about a recent case with the IRS on mileage:

The case: A tax preparer with an office in Charlotte, N.C., said she spent a lot of time driving to see clients, so she basically operated her business out of her car. She deducted significant car and truck expenses on her Schedule C. The IRS denied all the car and truck expense deductions.

Held: For the IRS. The court believed the taxpayer drove substantial distances for her tax preparation business. She kept a mileage log showing the date, origin and destination for each trip, reason for the trip, odometer readings, and total miles driven.

But these records were not good enough.

The Internal Revenue Code [§274(d)] requirements do not allow for gaps or unanswered questions raised by the statute.

The only reason given for a trip in the mileage log was “business.” What is also required is the client name and address and more specific information about the business conducted. The court would have accepted proof from other documents, such as emails and calendars, but she did not have other documentation.

Another problem: The log did not account for some of the mileage claimed for deductions.

And the log had some inconsistencies. For example, sometimes the log indicated that she had driven 20 hours in a 24-hour day, leaving no time for the claimed multiple client meetings on those days. Other inconsistencies further undermined the log’s reliability. [Brown v. Commissioner, No. 16604-19 (Tax Ct. 2021)]


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