According to the United States Tax Court (Docket No. 329-19S) the IRS disallowed all deductions in the following circumstances.
Facts of the case:
The petitioner was stationed at Fort Sam Houston in San
Antonio, Texas, but typically performed her duties at
both Lackland Air Force Base (Lackland) in San Antonio, Texas, and Fort Sam Houston. She was driving back and forth regularly between Fort Sam Houston, Lackland, and her home off base in San Antonio. The IRS reviewed whether the petitioner was entitled to the unreimbursed expenses for the travel, mileage, and “other.”
The petitioner provided the IRS with a self-reported mileage log, showing no business purpose.
Then again, the self-reported ledger and some receipts didn’t provide any business purpose for the expense. The IRS concluded that this expense was for a personal need, not a business one.
Other Business Expenses:
Miscellaneous expenses were cables, software, postage, speakers, phone bill, IPad, parking, uniform. The petitioner provided the self-reported ledger and some receipts. The ledger nor the receipts show any business purpose again.
The IRS goes on to explain that, of course, if there is a legitimate business purpose to unreimbursed expenses, the taxpayer can deduct those expenses. The taxpayer can even estimate the expanses, as per Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930). The US Tax Court opinion stated that” However, the expenses at issue are specified in
section 274 and are subject to strict substantiation rules thereunder that supersede the Cohan rule. See Boyd v. Commissioner, 122 T.C. 305, 320 (2004); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985)”.
Taxpayers must show sufficient evidence to establish:
(1) the amount of the expense,
(2) the time and place of the travel,
and (3) the business purpose of the expense.
( see Balyan v. Commissioner, T.C. Memo. 2017-140, at *7; sec. 1.274- 5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985))
The court record states that taxpayers’ reconstruction of expenses requires corroborative evidence with a high degree of probative value to support such a reconstruction to show a high level of
As for the mileage deduction, the Court explained that “a work location is
either a regular work location or a temporary work location–it cannot be both at the same time.” In this case, the mileage expense deductions
were incurred driving between Fort Sam Houston, Lackland, and the taxpayer’s home. For the reasons above, the Court disallowed the deduction. The same is true for the other deductions: travel and miscellaneous expenses.