Small businessmen who are not engaged in a partnership use Schedule C in computing taxable profits. Provided that they keep decent books and records, the process is supposedly straightforward. They simply record the appropriate expense from his records onto the appropriate line of the Schedule. For example, Insurance Expense is recorded on Line 15; Office expense is recorded on Line 18. Yet, in our audit work we find that it is Car and Truck Expenses (Line 9) that cause a great deal of pain. Why is this so? In this article we will address the why and how typical taxpayers will get themselves into trouble when an IRS small business audit begins to examine car and truck expenses.
