Answers · Deductions, assets & depreciation
Buying vs. Leasing a Business Vehicle
Business vehicle deductions depend on business use, ownership, vehicle type, method and strict substantiation.
This question is answered in full on the main page for it.
How it works
The rule, and what it turns on.
Standard mileage and actual-expense methods have eligibility/consistency rules; depreciation limits, listed property and leasing inclusion rules can apply.
Example
A pickup used 75% for business generally allocates allowable actual costs/depreciation 75%, assuming records support the use.
Common mistakes
What we see go wrong, and what we do instead.
- Deducting commuting.
- No mileage log.
- Deducting purchase price and loan principal.
A better approach
- Compare standard mileage vs actual where both are available.
Authority
Where this comes from, so you can check it.
IRC §§162 and 274(d); Treas. Reg. §1.274-5T; IRS Publication 463; current IRS standard mileage guidance. IRC §§167, 168 and 179; Treas. Reg. §1.167(a)-1; IRS Publication 946; Form 4562 and instructions.
Relevant case law
Commissioner v. Flowers, 326 U.S. 465 (1946) - travel expenses must have the required business connection;
ordinary commuting/personal choices are not converted into business travel.
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930) - reasonable estimates may sometimes be permitted, but the rule
does not override strict substantiation requirements such as IRC §274(d).
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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