Part II. Expenses — Instruction 1040 (Schedule C)

Capitalizing costs of producing property and acquiring property for resale. If you produced real or tangible personal property or acquired real or personal property for resale, you must generally capitalize certain expenses in inventory or other property. These expenses include the direct costs of the property and any indirect costs properly allocable to that property. Reduce the amounts on lines 8 through 27a and Part V by amounts capitalized. See Pub. 538 for a discussion of the uniform capitalization rules.

Exception for a small business taxpayer. A small business taxpayer (defined later under Part III ) is not required to capitalize certain expenses to inventory or other property. See Pub. 538 for more details.

Exception for creative property. If you are a freelance artist, author, or photographer, you may be exempt from the capitalization rules. However, your personal efforts must have created (or reasonably be expected to create) the property. This exception does not apply to any expense related to printing, photographic plates, motion picture films, videotapes, or similar items. These expenses are subject to the capitalization rules. For details, see Uniform Capitalization Rules in Pub. 538 .

Line 9 You can deduct the actual expenses of operating your car or truck or take the standard mileage rate. This is true even if you used your vehicle for hire (such as a taxicab). You must use actual expenses if you used five or more vehicles simultaneously in your business (such as in fleet operations). You can’t use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle.

You can take the standard mileage rate for 2025 only if you:

Owned the vehicle and used the standard mileage rate for the first year you placed the vehicle in service, or
Leased the vehicle and are using the standard mileage rate for the entire lease period.

If you take the standard mileage rate:

Multiply the number of business miles driven by 0.70. For example, 1,250 business miles driven × 0.70 = $875.00;
Add to this amount your parking fees and tolls; and
Enter the total on line 9. Do not deduct depreciation, rent or lease payments, or your actual operating expenses.

If you use your vehicle for both business and personal