According to an IRS fact sheet recently posted at http://www.irs.gov/newsroom/article/0,,id=163780,00.html , overstated adjustments, deductions, etc., account for more than $30 billion in unpaid taxes annually. Therefore, this fact sheet (the fifth in a series) explains the rules for deducting car and truck expenses. Taxpayers can use the standard mileage rate or actual expenses to compute their allowable business deduction, and can deduct the larger of the two. The 2006 standard mileage rate of 44.5 cents per mile cannot be used if the taxpayer (1) uses the car for hire (such as a taxi), (2) uses five or more cars at the same time (as in fleet operations), (3) claims depreciation or a Section 179 deduction, or (4) is a rural mail carrier who receives a qualified reimbursement. Regardless of which method is used, only the business use percentage of each expense is deductible if the business use of the vehicle is less than 100%. Fact Sheet FS-2006-26.