As a "sidebar" on this you might consider reading how the IRS want you to do your records see
(if you have Acrobat reader, you can look at an example prepared by the IRS - Daily car Log Weekly Travel Expense ). The following is what the law covers.The internal revenue code does mention what information is to be recorded and proven. The internal revenue code and related regulations mention that more reliability should be placed upon documents prepared at a time that is near the occurrence of the business use. Furthermore, the internal revenue code provides other methods the taxpayer may use in determining and proving the business use of personal automobiles. The internal revenue code makes no definition for the methods of recording the necessary and essential items of information. In addition, the code includes a provision that provides the taxpayer permission to use documents in the client’s records (or other party’s records) which establish the essential elements proving the business use. In all probability, I believe that any oversight party would agree that the code was written to allow taxpayers some latitude in each person’s own recordkeeping. Additionally, the code was written with the intention of encouraging a taxpayer to keep the records of the essential elements in order to foster compliance with these code sections and related regulations. To focus on only a portion of the written code would be tantamount to mitigating or at the least diminishing the intent of code itself. In addition to written records, you are permitted to permit oral representations of the taxpayer.
Essential Elements:
[Reg 1.274A5T(b)(6)]
Character of Records in General
The taxpayer has the flexibility to keep records in his own format and to offer records that substantiate the above elements in the format of his choice. First we shall address the issue of whether the taxpayer has alternatives and taxpayer rights to maintain records for his business in a manner which is convenient for him, still maintain the proof of the essential elements and concurrently furnish records which are not defined in the Code but establish all the facts and circumstances of the essential elements.
Incomplete records. If the taxpayer does not have adequate records to prove an element of an expense, then s/he may prove the element by: [Reg 1.274A5T(c)(3)]
1) His or her own statement, whether written or oral, containing specific information in detail as to the element, and
2) Other supporting evidence sufficient to establish the element.
In some cases, circumstantial evidence may support the amount of business and investment use. For example, the nature of the work, such as deliveries, provides circumstantial evidence of the fact that the taxpayer may use to prove the car for business purposes. Invoices of deliveries, court dates for an attorney, depositions for an attorney, etc. establish when the taxpayer used the car for business. [Reg 1.274A5T(c)(3)(i); Reg 1.274A5T(c)(2)(B)]
Sampling. The taxpayer can maintain an adequate record for parts of a tax year and use that record to substantiate the amount of business or investment use for the entire year if the taxpayer can demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year. [Reg 1.274Ä5T(c)(3)(ii)]
Destroyed records. The taxpayer can prove a deduction by reconstructing the records or expenses if the taxpayer cannot produce a receipt for reasons beyond his or her control, such as fire, flood, or other casualty. [Reg 1.274A5T(c)(5)]
Character of Records For Each element
Second, we shall discuss the character of substantiation that the Code of Federal Regulations requires for each of the elements.
Mileage Amount
As stated in the Code, the detail, time of recording, method of recording, frequency of recording and items shown are not defined in the Code and the taxpayer is provided some (within reason) freedom in each of the aforementioned items. The level of detail required in an adequate record to substantiate business/investment use might vary depending upon the facts and circumstances.
The taxpayer is not required to maintain a detailed individual logbook entry for each trip when there are routine trips of a set number of miles.
The taxpayer is required only to show the number of miles of the trip one time. In this instance, the trips to the Midland Courthouse, the appraisal districts, the title companies and other required trips are always the same number of miles.
Date
The date of the business use can be established by methods other than a logbook or daily diary. The corroborative/circumstantial documentation is not defined in the code, but is written into the CFR as a reliable method of substantiation. The Code provides for the use of other and related documents to establish the date element.
Business Purpose
The taxpayer is provided a means of substantiating the business purpose that is flexible. In fact, the substantiation is not a narrowly defined requirement, but a flexible definition of substantiation written in the Code of Federal Regulations.
The taxpayer’s statements that the use was business purpose, and related documentation is all that is required. No other documentation, written or otherwise, is necessary.
Summary
It is likely that the taxpayer cannot support 100% business use. On the other side, it is unreasonable that there was no business use. If the Service is to eliminate the amount of interest on the vehicle and any other mileage claimed, the taxpayer or his representative will locate the paperwork necessary and will be able to find more deductions than claimed at this date in the case.