Travel, 
Entertainment, 
Gift, and Car 
Expenses

For 2010, the standard mileage rate for the cost of operating your car for business use is 50 cents per mile. Car expenses and use of the standard mileage rate are explained in chapter 4.

For 2010, the first-year limit on the total depreciation deduction for cars increases to $11,060 ($3,060 if you elect not to claim the special depreciation allowance). For trucks and vans the first-year limit has increased to $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Depreciation limits are explained in chapter 4.

You may now deduct up to $500,000 of the cost of section 179 property placed in service in 2010. This deduction is phased out if the cost of the property exceeds $2,000,000. The section 179 deduction is subject to the deduction limits explained above. See Publication 946 and Section 179 Deduction in chapter 4 for more details.

The special first-year deprecation allowance has been extended to property placed in service in 2010. See Publication 946 and Special Depreciation Allowance in chapter 4 for more details, including which property is eligible for the special allowance.

Additional information with respect to Publication 463, including the application of the 50% bonus and 100% bonus depreciation rules, will be available on www.irs.gov/pub463 later in the filing season.

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

You may be able to deduct the ordinary and necessary business-related expenses you have for:

• Travel,
• Entertainment,
• Gifts, or
• Transportation.

An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.

This publication explains:

• What expenses are deductible,
• How to report them on your return,
• What records you need to prove your expenses, and
• How to treat any expense reimbursements you may receive.

You should read this publication if you are an employee or a sole proprietor who has business-related travel, entertainment, gift, or transportation expenses.

If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability in your income. However, there are exceptions if the use of the vehicle qualifies as a working condition fringe benefit (such as the use of a qualified nonpersonal use vehicle).

A working condition fringe benefit is any property or service provided to you by your employer for which you could deduct the cost as an employee business expense if you had paid for it.

A qualified nonpersonal use vehicle is one that is not likely to be used more than minimally for personal purposes because of its design. See Qualified nonpersonal use vehicles under Actual Car Expenses in chapter 4.

For information on how to report your car expenses that your employer did not provide or reimburse you for (such as when you pay for gas and maintenance for a car your employer provides), see Vehicle Provided by Your Employer in chapter 6.

Partnerships, corporations, trusts, and employers who reimburse their employees for business expenses should refer to their tax form instructions and chapter 11 of Publication 535, Business Expenses, for information on deducting travel, meals, and entertainment expenses.

If you are an employee, you will not need to read this publication if all of the following are true.

• You fully accounted to your employer for your work-related expenses.
• You received full reimbursement for your expenses.
• Your employer required you to return any excess reimbursement and you did so.
• There is no amount shown with a code "L" in box 12 of your Form W-2, Wage and Tax Statement.

If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. If you would like more information on reimbursements and accounting to your employer, see chapter 6.

If you perform services as a volunteer worker for a qualified charity, you may be able to deduct some of your costs as a charitable contribution. See Out-of-Pocket Expenses in Giving Services in Publication 526, Charitable Contributions, for information on the expenses you can deduct.

We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address:

Internal Revenue Service 
Individual Forms and Publications Branch 
SE:W:CAR:MP:T:I 
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We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. You can also send us comments from www.irs.gov/formspubs, select "Comment on Tax Forms and Publications" under "Information about."

Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.

Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service 
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If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

See chapter 7, How To Get Tax Help, for information about getting these publications and forms.