If you are a Sole Proprietor who is deducting Car and truck expenses on Schedule C, Line 9, you may be required to complete Part IV of Schedule C, “Information on Your Vehicle.” The purpose of this article is to explain how to complete this section of Schedule C.
Schedule C, Part IV begins on Page 2, Line 43 and ends on Line 47. This is a series of information questions designed to find out more about the vehicle you used for business. Here’s an explanation of each line in this section.
Line 43. When did you place your vehicle in service for business purposes? Answer this question with the month, day and year that your first used your vehicle for the Sole Proprietorship.
Line 44. You must keep track of your mileage in order to answer this question. Here’s what you must report: Total business miles (44a); Total commuting miles (44b); and Other miles (44c). In other words, you’ve got to keep track of the miles your drove the car for business purposes, as well as the miles you commuted to and from work (which is never a deductible business expense). The “Other” miles would be all personal miles other than commuting. The best way to have this mileage information available at the end of the year is to keep a mileage log.
Line 45-47. Next comes a series of simple “Yes/No” questions:
45: Was your vehicle available for personal use during off-duty hours? The answer to this is probably “yes”. “Off-duty hours” means the time during the day when the car is not used for business purposes.
46: Do you (or your spouse) have another vehicle available for personal use? Again, a very straightforward question. If you have another car (other than the one you drove for the business), the answer is “yes.”
47a: Do you have evidence to support your deduction? They are asking if you have written documentation of the mileage information provided on Line 44, such as a mileage log. Obviously, you want to be able to answer this question with a “yes.”
47b: If “Yes”, is the evidence written? This appears to be a redundant question. If you answered 47a with a “yes”, you have evidence to support your mileage deduction. And wouldn’t it stand to reason that the evidence is written? What other kind of evidence would it be?
Do not neglect this section of Schedule C. If you are deducting vehicle expenses, the IRS will expect you to provide the information in Part IV.