Rev. Proc. 64-10

To relieve individuals from the necessity of maintaining certain detailed travel expense records, the Internal Revenue Service will accept the use of the simplified method set forth herein for determining deductible costs of operating a passenger automobile in a trade or business or for the production of income (hereinafter referred to as "business purpose").

Subject to the conditions and limitations set forth herein, a self-employed individual or an employee may choose to compute the deductible costs of operating his passenger automobile (owned by him) for business purposes by use of a standard mileage rate of ten cents per mile for the first 15,000 miles of business purposes and seven cents per mile for business purposes in excess of 15,000 per year. Use of this method is optional on a yearly basis.

1. A deduction computed under this method shall be in lieu of all operating and fixed costs of the automobile allocable to business purposes. Included in operating and fixed costs are such items as gasoline (including State and local taxes), oil, repairs, license tags, insurance, and depreciation. Parking fees and tolls attributable to use for business purposes should be deducted as separate items. Gasoline taxes allocable to use for nonbusiness purposes (and allowable under section 164 of the Internal Revenue Code of 1954) may be deducted in addition to the deduction computed under this method.

2. The use of the simplified method is limited to a self- employed individual or an employee who operates one automobile for business purposes. Where a person alternates in using different automobiles on different occasions for business purposes, the standard mileage rate applies to the total business mileage of such automobiles, as if they were one, to arrive at a deduction. Similarly, if an individual replaces his automobile during the year, the total business mileage for the year of both automobiles must be used, as if they were one, in applying the standard mileage rate.

3. This method is not available (A) to compute the deductible costs of vehicles used for hire, such as taxicabs, or (B) for a taxpayer who uses in his business two or more automobiles simultaneously, such as in fleet operations.

4. In any year in which the simplified method has been used, straight-line depreciation will be considered to have been allowed. The allowable depreciation will act to reduce the basis of the automobile in determining adjusted basis as required by section 1016(a) of the Code.

5. This simplified method is not available for use where depreciation has been claimed in the past on an automobile by use of a depreciation method other than straight line, or where additional first-year depreciation has been claimed.

6. This Procedure is not available to an employee who claims a deduction for automobile expenses in excess of reimbursements or allowances received from his employer for such expenses. If an employee receives an employer-granted mileage expense allowance in an amount less than the amount computed under this method, the expenses reportable by an employee under this method are limited to the lesser amount. For the reporting requirements of employees see (A) in the case of local transportation expenses, section 1.162-17 of the Income Tax Regulations, and (B) in the case of travel away from home, section 1.274-5(e) of the regulations.

7. To make use of this method of computing automobile cost, a self-employed individual or employee is required to establish his business mileage (A) for local transportation, in accordance with regulations section 1.162-17(d), and (B) for other travel, in accordance with regulations section 1.274-5. The provisions of such regulations relating to substantiation in the case of the amount of an expenditure are inapplicable to deductions computed under this Revenue Procedure.

8. The simplified method set forth in this Revenue Procedure may be used by self-employed individuals and employees to determine deductible automobile costs for periods after December 31, 1962.

¹ Also released as Technical Information Release 537, dated Jan. 20, 1964.