The man had claimed $5,309 in vehicle expenses for his real estate sales business. Vehicle and travel expenses are subject to the special rules of Section 274, which requires corroborating records of the amount, time, place and business purpose of travel expenses. The judge found the taxpayer’s evidence wanting (my emphasis):
Petitioner provided his 2009 Mileage Chart and Itemized Categories documents, which appear to be reconstructions asserting the places he traveled to for business and the vehicle expenses he incurred in 2009. Petitioner, however, failed to provide any corroborating receipts or other records that substantiated the statements made in these two documents. Moreover, neither document identifies a business purpose for each trip, and both fail to show mileage. (While the Itemized Categories does have a handwritten note of “mileage for 2009 11,135″, this note alone does not substantiate the mileage of each trip or show how the mileage was allocated between business and personal use.) Additionally, the 2009 Mileage Chart provides a log for only three weeks for 2009 and fails to show the amount of each trip expense. Because petitioners failed to substantiate the claimed expenses as required by section 274(d), the vehicle expense deduction must be disallowed.
The IRS asserted negligence penalties for claiming an undocumented deduction. The taxpayer tried to tell the judge that nobody does that stuff:
Petitioner did not argue reasonable cause or good faith. Instead, petitioner argued at trial that no one keeps records in accordance with the “IRS code”.
Well, OK, then, screw Section 274! Well, no:
That argument is unpersuasive, and the section 6662(a) penalty will be sustained.
The IRS is serious about documenting business miles. If you have them, keep a log, a calendar, or use a smart-phone app to record the time, place, cost and business purposes of your travels as you go. If “no one keeps records in accordance with the ‘IRS code,’” no one is going to be happy with the results when they get audited.
The Senate Finance Committee voted to revive almost all of the 55 tax breaks that expired Dec. 31, providing benefits for wind energy, U.S.-based multinational corporations and motor sports track owners.
Motor sports track owners have lots of friends in high places.
It’s not just motor sports lobbyists who did will in the Finance Committee. Almost all
“expired” provisions of this lobbyist right-to-work vehicle were renewed, including the renewable fuel credits. The only expiring provisions that actually expire are the credit for energy-efficient appliances and a provison for oil refinery property, so there remains some lobbying to do.
But wait, there’s more! Tax Analysts reports ($link) that this Christmas in April bill includes a provision to “expand the research credit to allow passthroughs with no income tax liability to apply the credit, up to $250,000, to their payroll tax liability.” It also would renew the reduction of the S corporation built-in gain tax “recognition period” at five years through 2015.
While the House still hasn’t acted on any of this, the passage of all of this stuff on a bipartisan basis would seem to indicate that something like this is likely to pass. Still, Kay Bell thinks the House tax leadership may be reluctant to follow the Senate’s lead.
The reason Congress pretends these provisions are “temporary” is that under their rules, Congress can pretend that they will only cost as much as they will cost before they are renewed again, regardless of the probability that they will be renewed forever. It’s the kind of accounting that would get us thrown in jail if we tried it with the IRS or SEC, but it’s just another Thursday in Congress.
Link: “Summary of Modified Chairman’s Mark.”
Kristy Maitre, E-Filed Return Rejected at Deadline? Don’t Panic
Leslie Book, ACA and Victims of Domestic Abuse (Procedurally Taxing)
Russ Fox, Yes, Online Poker Players Must Pay Taxes
TaxProf, The IRS Scandal, Day 330
Lyman Stone, Missouri Senate Passes Problematic Income Tax Cut Plan (Tax Policy Blog). “Missouri’s state Senate this week passed a $621 million tax cut including a 0.5 percentage point income tax reduction and a special carveout to deduct up to 25 percent of business income.”
Howard Gleckman, Two Ways to Fix the Corporate Income Tax: Internationalize it or Kill It. (TaxVox). I vote “kill.”
Iowa city prepares to give mystery company millions. (Foxnews.com) “West Des Moines city officials have cued up $36 million in local and state tax incentives for a company, but won’t tell its citizens who that company is.”
Iowa View: From wind to solar, clean power is good for Iowa (Joe Bolkcom, Mike Breitbach). Green corporate welfare is still corporate welfare.
News from the Profession: Deloitte Declares Weekends Are Not For Working, Unless You Are Working (Going Concern)