In Uncategorized on 05/28/2014 at 23:32

How many times has an in-the-trenches, battle-weary, preparer heard that line? And how many times has that preparer replied, “no, you need a record of the people or firm involved and your business purpose, made at the time you paid the expense you’re claiming”?

True, you don’t need a logbook, but you do need an appointment book or some record not made up after the fact, connecting the expense to the ordinary and necessary requirements of your business.

Another telling of the many-times-told-tale is Judge Chiechi and Richard A. Canatella, in 2014 T. C. Memo. 102, filed 5/28/14.

I blog this case only because nothing else, and I mean nothing else, worthy of the slightest consideration emerged from 400 Second Street, N.W., today.

Richard is an attorney. No, I’m not going to harp on automatic Tax Court admission, notwithstanding that the Tax Court admissions exam is coming in November for everyone but attorneys. But here’s something from Richard’s trial testimony that makes my point better than I could.

“THE COURT: Okay, let’s move on to each of the expenses, and I’ll tell you what they are, just in the order in which they were in the statutory notice of deficiency. Meals and entertainment of $2,436, what do you have to tell me in support of your position that that entire amount is deductible?

“THE WITNESS: As far as I’m concerned, every expense is allowable, and if the examiner didn’t allow it, it’s because he didn’t accept cancelled checks, bank statements, and documentation that prove under, I believe, 7491 of the probate — I mean, of the revenue code that we’re entitled to the allowance.

“THE COURT: So you believe that having a cancelled check or a credit card [statement] entitles you to each of the deductions, is that right?

“THE WITNESS: Yes.” 2014 T. C. Memo. 102, at pp. 8-9.

Judge Chiechi blows that one off, and hardly bothers with Section 274, throwing it away with a footnote (footnote 7 at p. 11).

How ‘bout it, Tax Court? Want to let us all take the exam?


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