Jim Chapin, a California real estate broker, used his Toyota Sequoia SUV for his real estate business during 2009. He figured that he drove a total of 11,135 miles for business that year and deducted $5,309 for car and truck expenses. The IRS audited him and disallowed the entire deduction, and also added on a 20 percent negligence penalty. Chapin appealed to the Tax Court and lost. Here’s what he did wrong: Mistake No. 1: Not keeping a business mileage log Business mileage deductions are closely scrutinized by the IRS because they are commonly abused by taxpayers. You must keep a record of: your mileage the dates of your business trips the places you drove for business, and the business purpose for your trips. The IRS wants to know the total number of miles y...
Apr 14, 2014 by Stephen Fishman
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