The fallacy is claiming the vehicle is being used 5% for business use, based on lifetime miles, when depreciation is based on the period that the vehicle is being used 28% for business use.  Using that method, the taxpayer who drives only 50,000 miles for the first 10 years, all personal, and then another 50,000 miles in the last two years, all of it for business, has no gain.  The amount of basis reduced should be the same percentage of total remaining basis, as the percentage of business use.

In the absence of IRS guidance, I would not use a "protect the revenue" approach against my client's best interest -- especially when there's no evidence that an IRS examiner has ever done that.