Mileage Log

[Bonnie]

A customer has asked a question of me about keeping mileage logs and stated that she went to a tax seminar earlier this year and was told there are 3 methods of keeping a mileage log that are acceptable to do average business mileage. She said they were advised you could do a daily log or you could do a log of one particular week of the month and use the same week every month for 12 months and use this to do an average or the 3rd method was to keep a log for 3 consecutive months and use this for an average and miltiple by 4 for a yearly total. I have never heard of doing an average and using this as being an acceptable method. I thought the log had to be exact mileage kept daily for the entire year. Has anyone else heard of these other 2 methods as being acceptable to the IRS?

Thanks for any input you can give on this issue.

[S T]

Pub 463

From Pub 463 around page 27

Sampling. You can keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year.

Example. You use your car to visit the offices of clients, meet with suppliers and other
subcontractors, and pick up and deliver items to clients. There is no other business use of the car, but you and your family use the car for personal purposes. You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. Invoices and bills show that your business use continues at the same rate during the later weeks of each month. Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year.

Sandy

[David1980]

Personally I'd just have them keep a log of the full year. I don't want to be in the position to prove that a week my client has chosen is representative of all his driving for the year. Obviously the client would be motivated to pick the week they drive the most and average that over the year, but that would be incorrect.

[Snaggletooth]

Invoice Log

I use invoices.

I have sequentially numbered preprinted invoices. I use about 180 annually for tax clients, and about another 120 for a half-dozen different clients in my contracts analysis consulting business. About 50% of the latter is for work performed at home.

My sequential invoice log (showing dates, customer, amounts, nature, etc.) is reproduced on another Excel sheet, where there is a column to enter mileage. I don't keep a mileage log in the car, but I do enter mileage on this Excel sheet every week or so. Entering all this into a log every time I got into a car would drive me nuts.

There are some appointments that are no-charge, and might be 75 miles away. (Hopefully, not many) Good reason to write out a no-charge invoice.

[Lion]

Calendar

I've been writing mileage on my calendar. When I have "2 p.m. John Smith pick up tax info" written on my calendar, I then jot down 32.48 miles. Does this sound OK? I still use a paper FiloFax. When I remember to punch the tripometer, it's easy to write down miles upon my return. If I forget, or if I MapQuested a new client for directions anyway, I save the MapQuest printout with the mileage; I've usually typed in the client's info in the block provided on MapQuest, so it prints right on the page. A couple of frequently recurring trips I have listed at the front of my FiloFax, so I can just count up all the appointments I had during the year with ABC, Inc., for bookkeeping and multiply by the mileage I measured out and wrote down in the front. My hubby's been using his Palm to track his mileage. But, I still like to flip through the paper pages!

[Jiggers]

Mileage Log and other records

I use a small hand-held recorder.

From the time I get to the office until the time I go home I record my activity. Then the first thing the next morning I transfer my activity to my daily calender, client activity sheets, a mileage log, etc.

I keep track of my work for my clients. Though I bill tax returns by the form and schedule, I bill all other work by time.

EXAMPLE:
7:30 AM Arrive at office
8:35 AM To Post Office to pick up mail. Starting miles 43,211.0, ending miles 43,213.6
9:00 AM Work on JOHN'S June bookkeeping. Stop 9:45
9:45 AM James Smith in for appointment. Discussed his sale of rent house. Left 10:20
10:30 AM Back to JOHN'S June bookkeeping.........................

I also keep track of copies made, supplies used, postage, computer time, software used. This is all used in calculating my bill for those that I bill by time. I also keep track of this same information for the 1040/1040A returns.

It takes about 30 minutes to transcribe the daily activities each morning.

But you would be surprised at how much more billing is generated.

[Bonnie]

Customer who thinks she can do an average for the mileage is a real estate agent so the mileage varies month to month and week to week. In her line of work I don't see how she can possibly average anything. I told her I would not put anything on the tax return that cannot be documented and especially in this type of situation don't see how any kind of average could possibly work. I'm just concerned about someone putting on a tax seminar giving out such bad information. I had never heard of such a method. I'm wondering if maybe this is an acceptable method for figuring % of business use of a vehicle. Don't see how it could apply to standard mileage rate.

[ChEAr$]

acceptable method

Customer who thinks she can do an average for the mileage is a real estate agent so the mileage varies month to month and week to week. In her line of work I don't see how she can possibly average anything. I told her I would not put anything on the tax return that cannot be documented and especially in this type of situation don't see how any kind of average could possibly work. I'm just concerned about someone putting on a tax seminar giving out such bad information. I had never heard of such a method. I'm wondering if maybe this is an acceptable method for figuring % of business use of a vehicle. Don't see how it could apply to standard mileage rate.

usually boils down to how credible is it.
As to this method of taking several months and extrapolating results into a whole
12 month period, it is used and allowed by IRS auditors who have no reason to otherwise
a taxpayer of fudging.

[Burke]

My experience is that the IRS auditor can be as flexible or as hardline as they feel like they want to be. It may be a judgement call on the credibility of the taxpayer as perceived by the auditor. The three methods described have all been accepted at one time or another by various auditors. They have considerable leeway in what they demand so you never know. And focus changes with every new commissioner. Better to have complete records.

[joanmcq]

Extraopolating mileage can only be used when you can show it is constant, such as a salesman with a set route that does not vary. As the pub states, you have to have backup, such as a calendar or invoices that backs up your claim that the sample is representative. A real estate agent would have to keep a log of actual miles.

[ChEAr$]

Be sure

Extraopolating mileage can only be used when you can show it is constant, such as a salesman with a set route that does not vary. As the pub states, you have to have backup, such as a calendar or invoices that backs up your claim that the sample is representative. A real estate agent would have to keep a log of actual miles.

and let me know when you find one that does! (grin