Attorney-at-Law

THE SECTION 274 SLALOM

In Uncategorized on 12/11/2017 at 16:25

“A Tough Way to Make a Living”

Erika Denise Edwards, Docket No. 17386-16S, filed 12/11/17, is an attorney and an entertainer, a combination I have personally found impossible to effect. Erika needs, and gets, a small tax break and some kind words from CSTJ Lewis (“The Designated Name”) Carluzzo.

The issue in this off-the-bench designated hitter is Erika’s travel to the places where she entertains.

“Following concessions, and as relevant here on that Schedule C petitioner claimed an $11,300 deduction for ‘car and truck” expenses and a $6,708 deduction for ‘car rental’ payments. Both deductions relate to the use of the same rented automobile that petitioner used for self employment, commuting, and personal purposes. Neither deduction, although of a type allowable as a trade or business expense deduction under section 162 if properly substantiated, has been supported by the contemporaneous records required for deduction pursuant to section 274(d). Consequently both deductions were disallowed in the notice.” Order, transcript, at pp. 4-5.

Erika had no contemporaneous records, so her car rental expense numbers get tossed. But Erika told a good story on the stand.

“Although petitioner did not keep a contemporaneous record of the use of the rental car for business purposes, through a recently prepared mileage log (mileage log) she did corroborate her testimony regarding the use of the rental car to travel to various entertainment venues during 2013. According to her return, she drove 20,000 miles for business purposes.” Order, transcript, at p. 5.

“Her mileage log is more or less consistent with respondent’s regulation that allows it to be used for the purpose of section 274(d), see section 1.247-5T(c)(3), Temporary Income Tax Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985), but the ’less’ part does not show where each trip originated. Only mileage between her place of employment as an attorney and the entertainment venues would qualify for deduction. Mileage driven between her residence and the entertainment venues would constitute nondeductible commuting expenses. Having no better basis to make that distinction, we’ll allow her half of the mileage shown on the mileage log. The standard mileage rate…can be used to compute her allowable deduction.” Order, transcript, at p. 6.

That Erika gets docked the half mileage is of her own making by not keeping better records.

Thus the small tax break. Now for the kind words.

“We are not unsympathetic to petitioner’s situation, however, as the modest amount of income reported on the Schedule C compared to the many performances conducted during 2013 as shown on the mileage log suggests that her self-employment is a tough way to make a living.” Order, at p. 6.

 

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