How to treat miles driven to the mechanic, gas station, etc when calculating business use of car?

Question

I have a home-based business. If during the 2014 tax year I drove a car:

• C miles for car-maintenance errands,
• B miles for business errands, and
• P miles for personal errands,

if the total miles driven is C + B + P, how do I calculate the business miles driven when deducting via the actual expense method?

Please include evidence for your answer that is specific to the problem of car-maintenance miles.

Please note: I am NOT deducting $.56/mile! A couple people have assumed this already. The actual expense method means my deduction does not depend on the total miles I drove for business but on the percent of the miles I drove for business. But I still have to provide the totals.

Examples of car-maintenance errands:

• Driving a new car home from the dealership
• Driving to fill up at a gas station
• Driving to the mechanic
• Driving to the auto-parts store

I think my options are:

1. consider the maintenance driving as the same percent for business as the non-maintenance driving: business = B + [C * B / (B + P)].

   • This makes sense to me the most, because these miles are driven for both business and personal reasons (as the car is used for both), and the IRS's usual approach to mixed-use items is to multiply them by the percent business use.

2. (removed based on comments)

3. treat maintenance miles as business miles (because the car is necessary for business): business = B + C

4. treat maintenance miles as personal miles (because they are not solely for business): business = B

5. If I use the car mostly for business, count maintenance miles as business miles; otherwise, count maintenance miles as personal miles: business = B + C if [B/(B+P)]>0.5 else business = B

My common sense tells me to use #1 or #5, but taxes are not always common sense. I am looking for actual evidence from a reliable source for or against any of these options.

Answer 1

I contacted Stephen Fishman, J.D., the author of Home Business Tax Deductions, to let him know that this question was missing from his book. He was kind enough to send a reply.

My original phrasing of the question:

If your car is used for both business and personal use, and you deduct via the actual expense method, do trips to the mechanic, gas station, and auto parts store to service or repair the car count as business miles, personal miles, or part-business-part-personal miles? What about driving the newly-purchased car home from the dealership?

And his response:

Good question.

I can find nothing about this in IRS publication or elsewhere.

However, common sense would tell us that the cost of driving to make car repairs should be deductible. If you use your car for business, it is a business expense, just like transporting any other piece of business equipment for repairs is a business expense. This should be so whether you use the standard mileage rate or actual expense method. You should probably reduce the amount of your deduction by the percentage of personal use of the car during the year.

The same goes for driving a car home from the dealer.

Answer 2

Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses

Business and personal use.

If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.

Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense

Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3.

And of course never throw anything away until you're room temperature.

Answer 3

Since you are using the percentage method to determine the home/business use split, I would think that under most circumstances the distance driven to get your car from the dealership to home, and from home to mechanic and back would be less than 1% of the total miles driven. This is an acceptable rounding error. When refueling, I typically do that on my way to another destination and therefore it's not something I count separately.

If your miles driven to attend to repair/refueling tasks are more than 1% of the total miles driven, split them as you feel comfortable in your above examples. I'd calculate the B/P percentages as total miles less maintenance miles, then apply that split to maintenance miles as well.