Business owners can generally deduct the ordinary and necessary costs of doing business, but failure to keep thorough records can be costly. Vehicle records must be detailed, contemporaneous and include a percentage of business use. One store owner claimed 100% of gas costs for three vehicles. But his records lacked detail, were based on estimates and didn’t prove the business use. The IRS denied his deduction for most of the gas costs and the U.S. Tax Court agreed. The court stated the taxpayer “did not satisfy the strict substantiation requirements … with respect to any of the vehicles (for instance, he did not provide a mileage log).” (TC Memo 2024-91)
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