Rev. Rul. 70-559

Advice has been requested whether a taxpayer, an employee of a Federal Government agency, may deduct the expenses incurred in operating his privately owned automobile at the standard rate of 12 cents per mile for the first 15,000 miles and 9 cents per mile for each succeeding mile as permitted by Revenue Procedure 70-25, page 506, under the circumstances described below.

Under the agency's rules, employees have the option of using either Government vehicles on business trips at no expense to themselves or using their privately owned automobiles. If they choose to use their privately owned automobiles they are reimbursed for each mile they drive on official business. However, the rate of reimbursement is less than the standard rate set forth in Revenue Procedure 70-25.

During the entire taxable year the taxpayer chose to use his privately owned automobile on official business trips.

Section 162(a) of the Internal Revenue Code of 1954 provides, in part, that there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.

Revenue Procedure 70-25, provides that a taxpayer may, in lieu of proving his actual automobile expenses, deduct 12 cents per mile for the first 15,000 miles of business use of his car in a year, and 9 cents per mile in excess of 15,000 miles per year. A taxpayer is not precluded from deducting the amounts specified in Revenue Procedure 70-25 merely because he receives reimbursement in a lesser amount from his employer. Section 3.06 of the Revenue Procedure states that the method of computing deductions specified in the procedure will be permitted irrespective of whether an employee received a reimbursement or allowance for business automobile expenses from his employer, provided that such reimbursement or allowance is reflected in his return.

The fact that the taxpayer, in the present case, could have used a Government vehicle does not preclude the deduction of automobile expenses under section 162 of the Code. See Thomas H. Welch v. Commissioner, 290 U.S. 111 (1933), Ct. D. 755, C.B. XII-2 (1933), 112, in which the Supreme Court of the United States interpreted the word "necessary," relating to business expense deductions, as meaning "appropriate and helpful," and stated that it would be slow to override the taxpayer's judgment that the payments in question were appropriate and helpful. In the entertainment expense area, Revenue Ruling 63-144, C.B. 1963-2, 129 at 137 (answer to question 42) states, in effect, that the reasonableness of an expense is not affected merely because it involves first class accommodations or services.

Accordingly, it is held in the instant case, that the expenses incurred in operating a privately owned automobile on official business are ordinary and necessary business expenses under section 162 of the Code and the taxpayer may compute his deductible automobile expenses by using the applicable 12 cents or 9 cents per mile rate.