The $150,000 “Write-Off” That Turned Into $0 Overnight
How One Missing Mileage Log Can Destroy Your Entire Deduction
You’re a successful physician entrepreneur.
Your practice is booming, putting you deep into the highest tax bracket.
Your CPA tells you:
“Buy a G-Wagon. You deserve it, Doc. Even better—you can write it off.”
You hear:
“Free car paid for by my practice. Nice!”
So you spend a cool $150k…
Take $150k of bonus depreciation…
And move on with life.
Too busy to track mileage.
No mileage log.
No tracking.
No system.
Then the IRS shows up.
The Moment Everything Changes
Most doctors think:
“If it’s business-related, I can deduct it.”
That’s only half the formula.
Here’s the real rule:
Step 1 → Is it deductible?
→ IRC §162 (ordinary and necessary business expense?)
Step 2 → Can you prove it?
→ IRC §274(d) (strict substantiation for listed property like vehicles under IRC §280F)
If you miss Step 2…
Step 1 doesn’t matter.
No proof = no deduction.
That’s written into the Code.
The IRS Doesn’t Assume. They Ask.
The IRS is not asking:
“Does this look like a business expense?”
They’re asking:
“Show me.”
Passenger vehicles and SUVs are “listed property” under IRC §280F(d)(4), because they’re historically prone to abuse - therefore subject to stricter rules.
So IRC §274(d) requires specific proof of:
Amount (miles or expense)
Date and use (when and where you drove)
Business purpose (why you drove there)
This must be supported by “adequate records”:
Mileage logs
Diaries or trip sheets
Contemporaneous tracking supported by receipts or calendars
No adequate records?
No Deduction.
“But What About the Cohan Rule?”
Yes - Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), allows estimated deductions when expenses were incurred but the exact amount is uncertain.
Sounds helpful.
It’s not—for vehicles.
Congress shut that down with IRC §274(d).
For listed property (like cars):
Estimates don’t count.
You must substantiate.
Translation:
“I drove a lot for work”
≠ deductible
No mileage log = no vehicle deduction.
How a $150,000 Deduction Becomes $0
Dr. G-Wagon thought:
“I used the car for work.”
The IRS said:
“Prove it.”
He couldn’t show:
Total miles driven
Business vs. personal miles
Dates and locations of trips
Business purpose for each business trip
Result:
The $150,000 bonus depreciation deduction on the listed-property vehicle — claimed under IRC §168 (including §168(k) bonus) — was disallowed under §274(d).
$150,000 deduction → $0
Plus penalties
Plus interest
The Real Lesson
Don’t ask:
“Can I write this off?”
Ask:
“How will I prove this to the IRS?”
Because in tax:
You are not innocent until proven compliant.
Dr. Taxtor’s Prescription
If you’re taking large vehicle deductions:
Build the system BEFORE the deduction.
Track mileage (app or log, with total and business miles)
Record entries contemporaneously, or as close in time as possible
Document business purpose for each trip
Track total miles vs. business miles annually
Substantiation isn’t paperwork.
It’s protection.
Final Thought
The deduction is not the strategy.
The proof is.