Keep in mind that the IRS has a number of incentives in calculating that number, and "accurately reflect the cost of driving" is not the dominant one.
Like every other safe harbor in the tax code, the primary purpose is "reduce the cost and uncertainty of tax administration." The IRS has to review 1~2% of all firms in the economy every year; if they pick a number too small, many of those firms will have hundreds of extra line-item entries in their books to satisfy the Actual Cost method. The IRS truly does not want to overly burden taxpayers. They also don't want to burden their examiners over what, for the overwhelming majority of small businesses, is a trivial amount of money -- the net difference in taxes between Maximally Accurate Car Costs and the 53.5 cents/mi approximation is likely on the order of a few hundred dollars, and that is below the care floor for business returns.
So how did they arrive at 53.5 from 54 if it is one way or another for them?
You are talking about $/mile. Moving that figure up or down a penny quickly approaches a billion on the macro scale and their overarching incentive is keeping it down.
I mean, I will take this figure any day over someone higher up the thread essentially arguing it's much less because all Uber drivers have cars anyway that they finance through (?) so accounting it towards the Uber income doesn't make sense (??).
This is a subtle and difficult thing, but I promise you it is true: the IRS is not primarily scored on revenue generation. Their incentives are (approximately) hire more IRSians, minimize complaints to Congress regarding the tax code, minimize complaints to Congress regarding the IRS specifically, efficiently administer taxes, and generate revenue, in order.
There are a lot of changes that are within the IRS' authority to make which would be net-positive from a tax collection perspective and which it would not do and, if it did, would be undone from above. One is "radically increase the number of audits administered."
Like every other safe harbor in the tax code, the primary purpose is "reduce the cost and uncertainty of tax administration." The IRS has to review 1~2% of all firms in the economy every year; if they pick a number too small, many of those firms will have hundreds of extra line-item entries in their books to satisfy the Actual Cost method. The IRS truly does not want to overly burden taxpayers. They also don't want to burden their examiners over what, for the overwhelming majority of small businesses, is a trivial amount of money -- the net difference in taxes between Maximally Accurate Car Costs and the 53.5 cents/mi approximation is likely on the order of a few hundred dollars, and that is below the care floor for business returns.