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Test Your Tax IQ: Deducting More Than One Business Vehicle

Contrary to popular belief, the IRS does not limit business owners to claiming deductions on only one business vehicle. You might maximize tax benefits by using multiple vehicles for business purposes. This is particularly true when

  • you use the vehicles predominantly (more than 50 percent) for business, 

  • you drive more business miles than your spouse, and 

  • the vehicles have closely aligned adjusted bases.

The allowability of multiple vehicle use is made clear in both IRS Publication 463 and IRS Form 4562. 

Several tax court rulings have upheld your right to claim business deductions on multiple vehicles within the same tax year.

What the Courts Say About All This

Acceptance of the multiple-vehicle strategy has come not just from the IRS but also from the courts. In at least three cases, the Tax Court has upheld a taxpayer’s right to claim business deductions on more than one vehicle during the same tax year.

Case 

What Happened

What Court Said

Melvin

IRS allocates mileage between business use and personal use on three different cars during the same tax year. 

Court has no problem with and actually relies on the allocation to decide this case on other grounds. 

World of Service

Nutrition consultant claims deductions for business use of three cars during the same tax year.

Court okays deductions for 50 percent of gas, repairs, depreciation, and maintenance for each car.

Fisher

Horse breeder claims depreciation on five vehicles in Year 1 and six in Year 2. 

Court has no problem allowing depreciation of each vehicle but cuts amount of allowable depreciation for lack of documentation. 


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IRS Key Contact Information and Helpful Hints

December 10, 2020

Amended Tax Return Status: 866-464-2050  www.irs.gov/filing/wheres-my-amended-return Apply for an EIN: 800-829-4933  www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers Estate and Gift Taxes: 866-699-4083  Excise Tax Help: 866-699-4096  FBAR Online Filing  https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html Get Tax Transcript for Individuals: 800-908-9946  www.irs.gov/individuals/get-transcript Identity Theft: 800-908-4490  Power of Attorney (Form 2848)  Fax: 855-214-7519 for Alabama, Arkansas, Connecticut, Delaware,

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Tax Considerations When a Loved One Passes Away (Part 1)

January 5, 2021

A financially comfortable loved one has passed away. In this year of seemingly endless bad news, sadly, that’s not an uncommon situation.

The now-deceased loved one may have been single or married, and may or may not have been a relative. In any case, you’ve stepped up to the plate and taken on the challenging job of acting as executor for the deceased person’s estate. Good for you.

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