Here’s a real-life example of why having the proper documentation is very important for claiming automobile expenses and mileage on your taxes.

Learn about how to meet the substantiation/documentation requirements required by the Internal Revenue Code on our blog here.

“An attorney was not entitled to deduct unsubstantiated car and truck expenses because he failed to satisfy the strict substantiation requirements. The taxpayer produced two reconstructed mileage logs by relying on entries he made in his iPad calendar purporting to show his client-related and administrative automobile use.

However, the logs did not satisfy the “adequate records” requirement because the taxpayer created them several years after the relevant automobile use and long after he had full present knowledge of each element of each expenditure or use. Moreover, the calendar used to create the logs was absent from the record and the credit card statements and other documents in evidence were insufficient to corroborate the business purpose or location of the claimed expenditures.

Further, the taxpayer was liable for an accuracy-related penalty based on negligence. The taxpayer did not maintain sufficient records to support the car and truck expenses deduction. Further, the taxpayer failed to show reasonable cause for his failure to maintain satisfactory mileage logs. Moreover, the IRS produced a completed penalty approval form and a declaration of his examiner that established supervisory approval for the penalty.”

A.G. Velez, TC Memo. 2018-46, Dec. 61,155(M)