Standard mileage rates.

Rev. Proc. 2005-78 sets forth the 2006 optional standard mileage rates that may be used by employees, self-employed individuals and other taxpayers when computing the deductible costs of operating an automobile (including cars, vans, pickups or panel trucks) for business, medical, moving or charitable purposes.

Business mileage: For 2006, the standard rate for business mileage is 44.5 cents per mile.

Medical and moving mileage: The standard mileage rate for medical or moving expenses has been increased to 18 cents per mile.

Charitable mileage: The mileage rate for charitable purposes, other than activities related to Hurricane Katrina relief, remains at 14 cents cents per mile.

Hurricane Katrina mileage: For 2006, the rate for miles driven for charities providing Hurricane Katrina relief be 32 cents per mile for deduction purposes and 44.5 cents per mile for reimbursement purposes.

Deemed depredation: When the 2006 business standard mileage rate of 44.5 cents is used, depreciation will be considered to have been allowed at a rate of 17 cents per mile. This depreciation rate Hill reduce the taxpayer's basis in the automobile. The standard business mileage rate may not be used for automobiles used for hire (e.g., taxicabs), or when five or more automobiles are owned or leased and used simultaneously by the taxpayer (e.g., fleet operations).

Business travel substantiation: Rev. Proc. 2005-78 also provides rules under which an employee's ordinary and necessary expenses for local travel or transportation away from home will be treated as substantiated. These substantiation rules apply when an employee has received a reimbursement or other expense allowance from an employer, its agent or a third party (Rev. Proc. 200464, as modified by Ann. 2005-71, is superseded).

Lesli S. Laffie, J.D., LL.M.