Business owners can generally deduct ordinary and necessary costs of doing business, if they prove the costs are legitimate. One married couple owned an engineering firm. Among other tax issues, for two tax years, they claimed depreciation of $76,264 on three vehicles, but didn’t provide required details including each vehicle’s ownership, cost and useful life. They claimed $34,197 in mileage deductions and provided receipts and mileage logs, but the U.S. Tax Court found they didn’t show any related business purpose. The court also found the mileage claimed included commuting costs. The court disallowed these deductions and assessed penalties and added taxes. (TC Memo 2023-39)
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