Log Book Necessary to Claim Business Miles

A recent court case illustrates the necessity of always maintaining a contemporaneous written log book to claim a deduction for business miles.

The taxpayer was a heavy equipment operator working as part of an earth stripping crew for a company that produced and distributed construction materials. As part of his job, the taxpayer traveled to multiple out-of-town work sites. The taxpayer claimed 32,640 business miles on his 2014 tax return as unreimbursed employee business expenses. The taxpayer did not keep a log, calendar, or any records of the various work locations. He was also unable to provide through testimony any specific locations at which he worked, how often he worked at those locations, or how many miles he drove between those work locations.

Author’s Comment: Note that this is a tax court case from 2021 concerning the 2014 tax year. Without written records, it is understandable the taxpayer could not provide oral testimony on specific dates and locations for something he did years earlier.

The tax court stated that in the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount, the court generally may estimate the amount of the deductible expense, bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making. The court generally will not estimate a deductible expense, however, unless the taxpayer presents sufficient evidence to provide some basis upon which an estimate may be made.

IRC section 274(d), however, supersedes this estimation provision. The court will not allow any expenses with respect to any listed property defined under IRC section 280F(d)(4), unless the taxpayer substantiates the amount of the expense, the time and place of the use of the property, the business purpose of the expense, and the business relationship to the taxpayer of the property used. Listed property includes any passenger automobile.

While a taxpayer may opt to use the standard mileage rate to calculate car and truck expenses, the taxpayer must strictly substantiate the business mileage and the business purpose of each vehicle use. To satisfy these requirements, the taxpayer generally must keep a contemporaneous mileage log, calendar, or other adequate record that substantiates the extent to which the vehicle was actually used for business rather than personal purposes.

In the absence of adequate records, a taxpayer alternatively may establish an element of an expenditure by “his own statement, whether written or oral, containing specific information in detail as to such element” and by “other corroborative evidence sufficient to establish such element.” Even if an expense would otherwise be deductible, the deduction may still be denied if there is insufficient substantiation to support it.

At trial, the taxpayer did not provide any testimony or documents to support his claimed deductions for his car and truck expenses. He did not keep contemporaneous mileage logs, calendars, or other records to determine miles driven between worksites, the locations of his worksites, and the time worked at those sites. Even though he submitted a letter from his employer stating he was required to travel to varying sites as part of his employment, that letter was dated in 2017 and was not specific as to the details necessary to support claimed deductions for 2014.

The court disallowed the taxpayer’s mileage deduction for 2014.