IRS is hot on the trail – be aware!
Following is an excerpt from Tax Court Summary Opinion # 2011-112 dated September 22, 2011
“Travel expenses, however, including meals and lodging, entertainment expenses, and expenses with respect to listed property must be substantiated by adequate records or sufficient evidence corroborating the taxpayer’s own statement showing the:
(1) Amount of such expenditure
(2) time and place of the travel or entertainment
(3) business purpose of the expense, and
(4) the business relationship to the taxpayer of the person being entertained.
Petitioner has not substantiated his expenses under either method. The calendars that petitioner introduced into evidence, although contemporaneous, did not include the number of miles he drove for each business trip nor which vehicle he used.
He did not begin to construct a mileage log until 3 months before trial.
Petitioners failed to substantiate thousands of dollars of expenses for the years in issue. Petitioners provided no evidence that they acted in good faith and with reasonable cause.
Accordingly, respondent’s determination of the accuracy-related penalties is sustained.
