$75 Receipt Rule for Business Vehicles

April 30th, 2022 at 8:04 PM

The $75 rule is contained in IRS Regulaton 1.274-5(c)(2)(iii), and the best explanation of what this rule says is found in IRS Notice 95-50, which states that the $75 rule applies to travel, entertainment, gifts, and listed property. IRC Section 280(f)(d)(4) states that listed property includes any passenger automobile and any other property used as a means of transportation.

Explicitly, this means that your vehicle is listed vehicle; therefore, you do not need a receipt for a vehicle expense less than $75.

Key Point-Tax law requires proof even when the law says you don\'t need a receipt.So, always think proof. If you don\'t have receipts, do your gas expenses help prove your mileage, and does your mileage help prove your gas expenses. Do you jot down the cost of gas on a timely basis? If not, the IRS gives you up to 1 week for this this timely test.

The IRS enables the $75 rule only for Section 274(d) expenses which are expenses for travel, gifts, and listed property that require additional documentation. Therefore, if you buy office supplies that cost $15, you need a receipt. But, if you pay $65 to fill your gas tank in your business vehicle, you do not need a receipt.

Note--Your bank and credit card statements do not give you a receipt--they only prove you paid the money, but not what you paid for.

Therefore, your must keep the receipts to show what you paid for.....and with the proof of payment, then you have a winning combination.

Mark S. Fineberg, CPA