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Split Rate Mileage Recordkeeping
By now, most of us are probably aware that the business mileage rate for 2008 is 50.5 cents per mile for the first half of the year and 58.5 cents for the last half of the year. The question that comes to mind is whether a taxpayer can simply use the average of 54.5 cents per mile for the whole year.
Unfortunately, the calculation cannot be simplified by averaging the two rates. The IRS requires that a contemporaneous log of the total miles and business miles for the year is maintained. This means that a taxpayer must record his or her business trips and the associated mileage on a daily basis in order to properly document any business travel. Averages and estimates are not considered adequate records. The mileage for the first half and last half of the year must be determined from the mileage record and the appropriate mileage rate applied to each.
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Disclaimer: The tax advice included in this newsletter is an overview of some complex tax rules and is not intended as a thorough in-depth analysis of the tax issues discussed. Do not act on the information included in this newsletter without first determining how these issues apply to your particular set of circumstances and if there are any special tax laws or regulations that might apply to your situation.
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