Business Car Expenses

Taxpayers have two options to calculate car-related expenses:

1. standard mileage rate
   • must not operate 5 or more cars at the same time
   • must not have claimed depreciation deduction other than straight-line method
   • must not have claimed section 179
   • must not have claimed special depreciation allowance
   • must not have claimed actual expenses after 1997 for a leased car
   • cannot be a rural mail carrier who received a qualified reimbursement
2. actual expense

Changing Methods

• you may switch from standard mileage rate to actual expense. But you must then use straight-line depreciation. The new basis is the cost minus the depreciation portion allowed in standard mileage rate.
• However, switching from actual expense to standard mileage rate must satisfy all the above requirements, which normally it is a BIG no.

Publication 463