In Uncategorized on 11/14/2018 at 19:54

No, this is not a candidate for one of those aviation videos on youtube. This is Judge Kerrigan delivering an off-the bencher, wherein a pilot’s logbook, derived from his GPS readings, avoids the Section 6662(a) substantial understatement chop.

Here’s David McCallum & Annie M. McCallum, Docket No. 16833-17, filed 11/14/18. It’s Dave’s story. He’s an aircraft mechanic who works out of Napa County Airport, the “Skyport to the Wine Country.” Sometimes a gig last only six minutes. Dave works for several different outfits, and flies between jobs in his own airplane.

Dave deducts his aircraft flying as unreimbursed employee business expenses. And they are unreimbursed, because the outfits wouldn’t pay Dave to fly. But they would provide car services to take him from KAPC (that’s the airport code for Napa County) to wherever the airplane needing Dave’s ministrations might be.

Dave’s deductions spin out.

“Except for taxpayers on temporary work assignments, costs of traveling to and from a place of business are considered personal expenses and are not deductible. Commissioner v. Flowers, 326 U.S. 465, 473-474 (1946). Petitioner husband was not on a temporary work assignment. He chose to fly his plane instead of taking transportation provided by [employers]. His unreimbursed travel expenses are considered personal expenses and are not deductible as ordinary and necessary business expenses or as unreimbursed employee expenses.” Order, transcript, at pp. 7-8.

IRS’s counsel flourishes a Civil Penalty Approval Form, and has shown a substantial understatement.

But Dave the pilot keeps pilot’s records.

“Petitioner husband kept records of his flights through his plane’s GPS system. The GPS system recorded the flights in real time. Later, petitioner husband compiled the data from his plane’s GPS system. He separated his business flights from his nonbusiness flights in his records.” Order, transcript at p. 5.

That’s good enough for Judge Kerrigan.

“Petitioner husband kept records pertaining to all of his flights for his travel to and from jobs. He provided credible testimony on how he calculated the miles he traveled and the amount of reimbursement he received. We find that petitioner husband acted in good faith. Petitioners are not liable for the section 6662(a) penalty.” Order, transcript, at p. 8.

Takeaway- GPS is ubiquitous. Most people have some version thereof on their smartphones. Surely some bright fourteen-year-old has an app that permits tracking one’s whereabouts “in real time.” What a help this would be in a Section 274 set-to! Or real estate pro-ship. I can just imagine a petitioner asking that Siri be sworn to testify as to his/her peregrinations and hours on the jobsites.

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