How should a real estate agent document commission-driven expenses and heavy mileage?

What must each trip entry show, and when must you make it?

The federal substantiation regulation, 26 CFR 1.274-5T, treats a car as listed property and requires proof of the amount of each business use, measured in miles, the vehicle's total use for the tax period, the date of each use and its business purpose. It defines a record made at or near the time as one made while you have full present knowledge of each element, such as the amount, time, place and business purpose. The regulation counts a weekly log that accounts for the week's use as made at or near the time, and accepts a record prepared in a computer memory device with the aid of a logging program.

Publication 463 lets one record cover several uses that form a single use, such as a round trip or uninterrupted business use, and says minimal personal use, such as a lunch stop between two business stops, doesn't interrupt business use. On a day of unplanned showings, one entry can cover a run of business stops; wherever the use may change (leaving or reaching home or the office, or a personal stop beyond a minimal one), note the odometer reading or the app's distance for that leg, so each leg's miles can be separated later. Each entry carries the following:

• Date. Record the day of the run.
• Start and end. Mark where the run began and ended as home, office or other.
• Stops and purpose. List each address or listing number with what you did and for whom, such as "showing, 14 Elm St, buyers Garcia".
• Miles. Note the odometer at the start, at each point where the use may change, and at the end, or the distance a tracking app recorded for each leg.
• Costs on the way. Add parking and tolls with their amounts.

What facts let business and personal driving be told apart later?

Which trips count as business belongs to the guide on business mileage for commuting and home-based workers; the record holds the facts that decision needs. Schedule C (Form 1040) for 2025, in the vehicle part completed by those not required to file Form 4562, asks how many of the year's total miles were business, commuting and other miles. So mark whether each run began and ended at home, the office or elsewhere, name the client or listing behind each stop, and note personal stops.

What total-distance evidence does the year need?

The regulation requires proof of the vehicle's total use for the period, and Schedule C asks for the year's total miles; neither says how the total must be evidenced. Readings from the vehicle itself are the simplest evidence, so for each vehicle used for business, keep the following:

• Opening reading. Photograph the odometer, with the date, on the first day of the tax year or the day business use began.
• Closing reading. Photograph it again on the last day of the tax year.
• In-service date. Record the date you placed the vehicle in service for business purposes, which Schedule C's vehicle part asks for.
• The split. Divide the total into business miles from the trip entries, commuting miles and other miles, which together equal the closing reading minus the opening reading.
• Corroboration. File service and inspection invoices that print the odometer with the log.

When the showing car is also the household car, everyone's driving runs through one odometer. The two readings capture all of it, including family trips that no app on your phone sees, and your trip entries show which part was business.

How is a rebuilt or app-generated log treated?

The regulation says a contemporaneous log is not required, but a record made at or near the time and supported by documentary evidence has a high degree of credibility not present in a statement prepared later, when there is generally a lack of accurate recall. It adds that a later statement needs corroborating evidence of high probative value to reach that level, and that without adequate records each element must be shown by your own statement, written or oral, containing specific information in detail, plus other corroborative evidence sufficient to establish it, which for the miles, date and place of a use must be direct evidence such as a written statement, witness testimony or documentary evidence; circumstantial evidence is allowed for business relationship and the business purpose of an expenditure. A log rebuilt at year end from a calendar, client list or navigation history is that kind of later statement; the regulation does not say whether those sources meet that standard, and a client list shows neither the date nor the miles of a trip, so make the record at the time instead of planning to rebuild it.

The QuickBooks app, for example, records each trip and leaves you to categorize it and add its purpose. Intuit's help article Automatically track mileage in QuickBooks Online (updated August 3, 2026) says the app tracks trips from start to finish and should be kept open during the trip, that each trip is then categorized as Business or Personal, and that business trips added manually need a written purpose. Whatever tool you use, check what it records and add the following:

• The business purpose and client or listing for each trip, on the same day
• Any drive the tool missed, from your notes and odometer readings
• The year's opening and closing odometer readings, which cover every driver

Which records does each vehicle-cost method need all year?

IRS Topic 510 (updated September 24, 2026) says that to use the standard mileage rate for a car you own, you must choose it in the first year the car is available for use in your business; in later years you can choose either method. For a leased car, choosing the standard rate means using it for the entire lease period, including renewals. Publication 463 adds that you make the choice by the due date, including extensions, of your return, and that a later switch to actual expenses uses straight line depreciation. Topic 510 bars the standard rate for a car if any of these applies: you operate five or more cars at the same time; you have claimed depreciation on it by a method other than straight-line; you have used the Modified Accelerated Cost Recovery System (MACRS); you have claimed a Section 179 deduction on it; you have claimed the special depreciation allowance on it; or, for a leased car, you have claimed actual expenses after 1997.

Topic 510 makes business parking fees and tolls separately deductible under either method. Publication 463 says a self-employed person can deduct the business-use part of car-loan interest even with the standard mileage rate, and the business part of state and local personal property taxes on motor vehicles on Schedule C. For actual expenses, Topic 510 divides costs between business and personal use and lists gas, oil, repairs, tires, insurance, registration fees, licenses and depreciation or lease payments; the regulation's vehicle expenditures also include the cost of acquisition, capital improvements, and maintenance and repairs.

What to keep this year depends on where you stand:

For a leased car, Topic 510 makes that first choice bind the whole lease: the standard rate, once chosen, stays, and claiming actual expenses bars it.

How do you read gross commission and fees off the settlement statement?

Publication 583 says to keep supporting documents that show the amounts and sources of your gross receipts, lists Forms 1099-NEC among them, and says expense documents should show the amount paid and that it was for a business expense. When the brokerage pays you net, only its settlement or commission statement for the closing shows the gross amount and each deduction; the deposit shows neither. Get that statement for every closing, file it with the transaction, tie its net figure to the deposit, and ask the brokerage about any difference. Here is one closed sale, with invented figures:

If income starts at the 12,000.00 side commission, the entry is:

Post this once, as the deposit itself. If bookkeeping software has already imported the 7,275.00 deposit, record the commission and deductions against it or match it to this entry; never also accept the deposit separately.

If income starts at your 8,400.00 share instead, there is no split line. In every case, record the three fees, 1,125.00, as expenses, so income is never the 7,275.00 deposit. Whether income starts at the 12,000.00 side commission with the split as a cost, or at your 8,400.00 share, is an open question to settle with whoever prepares your return. Either way, reconcile your recorded income to each Form 1099-NEC at year end: the Schedule C instructions say line 1 must include amounts properly shown on your Forms 1099-NEC and, if their box 1 total is more than line 1, you attach a statement explaining the difference.

How should listing marketing and preparation costs be captured?

Two kinds of marketing cost need different capture:

A photographer's or sign company's receipt seldom names the listing; a reference added when you pay lets you add up each listing's cost against its commission and spot costs the seller agreed to repay. Tagging only listing-specific costs keeps the routine short.

What do client gifts and costs paid for a client need?

For each business gift, the substantiation regulation requires its cost, the date, a description, the business reason, and the recipient's occupation or other information, such as name or title, sufficient to establish the business relationship. Publication 463 lets you deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year, and generally treats a gift to a member of a customer's family as an indirect gift to the customer, so record whom each gift was for. It says incidental costs such as engraving, packaging, insuring and mailing are generally not included in the gift's cost for the limit, and that spouses who both give gifts are treated as one taxpayer. It adds that a cost is incidental only if it doesn't add substantial value: gift wrapping is, but an ornamental basket for packaging fruit isn't if its value is substantial compared with the fruit. Publication 463 does not count as gifts for the limit an item costing $4 or less that has your name clearly and permanently imprinted and is one of a number of identical items you widely distribute. So record a closing gift's price and its wrapping or delivery separately, and describe any basket or container so its value can be judged.

For a cost paid for a client, such as an inspection or repair, decide when you pay whether the client will repay it. Tag a repayable cost with the client and transaction, keep it apart from your own expenses, and match the repayment to it when it arrives. Record a cost you absorb, such as an inspection you pay for and won't recover, with the receipt, client, transaction and reason, and add the gift elements above. Whether such a cost is a business gift subject to the $25 limit or an ordinary business cost is an open question to settle with whoever prepares your return; recording the gift elements lets them treat it either way.

How do you support business spending on a personal card?

Publication 583 says proof of payment, by itself, does not establish that you are entitled to a deduction, and that you should also keep documents such as credit card sales slips and invoices showing you incurred the cost. A personal-card purchase therefore needs the receipt or invoice, the statement line, and a note of the business purpose and any listing. Then record how it was funded:

• You are not your business's employee. Intuit's help article Pay for business expenses with personal funds (updated August 5, 2026) records the purchase in QuickBooks against an Owner investments account or a similar equity account, and any later repayment to you against that same account.
• Your own corporation repays you as its employee. Publication 463 says an employer's reimbursement arrangement is an accountable plan only if it includes all three of its rules: your expenses have a business connection, you adequately account to your employer for them within a reasonable period of time, and you return any excess reimbursement within a reasonable period of time. Keep the expense report, its receipts and the repayment record together.

Review every personal card statement monthly; business purchases there surface nowhere else. Moving that spending to a separate account is covered in the guide on separating business and personal expenses.

How are licence, board, association and education renewals placed in the period they cover?

Renewal receipts often exist only in an online portal. When you pay one, download the receipt at once, record the start and end of the period it covers beside the amount and payment date, and file it under each period it covers. Publication 538 says that under the cash method you generally deduct expenses in the tax year you actually pay them, but an expense paid in advance is deductible only in the year to which it applies unless it qualifies for the 12-month rule. That rule covers certain rights or benefits that do not extend beyond the earlier of 12 months after the right or benefit begins or the end of the tax year after the year of payment; if you have not been applying these rules, Publication 538 says you must get IRS approval before using them. Under an accrual method, Publication 538 says you generally deduct or capitalize a business expense when the all-events test has been met and economic performance has occurred. On either basis, the coverage dates show which rule applies: whether a renewal falls within the 12-month rule, or when economic performance occurs. Don't change when you deduct renewals without first checking the IRS-approval requirement above.

What capture routine works from a phone between showings?

Run these steps in order:

1. At each stop. Before leaving the car, update the run's entry with the address or listing, purpose and client, plus the odometer reading wherever the use may change. Photograph any receipt at the counter and tag it with the listing or client, "repayable" if the client will repay it, and "personal card" if you paid that way.
2. End of the day. Review the app's trips, categorize each, add purpose and client, and enter any missed drive from your notes and odometer readings.
3. Each week. Finish the week's log, file each commission statement received and tie its net figure to the deposit.
4. Each month. Match every line on your business and personal card and bank statements to a captured document. For a business line with no document, ask the vendor for a copy receipt or invoice; if none exists, write a dated note now of the amount, date, place and business purpose, and attach what corroborates it, such as the listing file. For travel, gift and transportation costs, Publication 463 says you can't deduct amounts you approximate or estimate; record actual figures for every line.
5. Year end. Photograph the odometer, compare the year's commission statements with each Form 1099-NEC, and check that each renewal is filed under the period it covers.

How long should the mileage and expense records be kept together?

The IRS page How long should I keep records? (updated June 30, 2026) sets these periods:

Publication 463 counts the 3 years from the date you file the return on which the deduction is claimed, and treats a return filed early as filed on the due date. The IRS records page says to keep records relating to property generally until the period of limitations expires for the year you dispose of the property, and Publication 463 says to keep records of the business use of your car for each year of the recovery period.

To keep the two sets aligned, file each tax year's trip log, odometer evidence, commission statements and expense records together, and keep them for the longest period that applies to that year. Keep the car's purchase, improvement and depreciation records, with the logs that set each year's business-use share, until the period expires for the year you dispose of the car.