Attorney-at-Law

MY HOME, FAR AWAY

In Uncategorized on 10/25/2019 at 01:46

The words of Bill Danoff, Taffy Nivert, and John Denver in their 1971 hit is the story of Ricky R. Ressen & Rosalind Ressen, Docket No. 18959-18, filed 10/24/19, an undesignated off-the-bencher from Judge Morrison.

It’s really Ricky’s story, as he’s a peripatetic construction manager with a truck and an abode in MN. But unlike other years where Ricky stays in MN, for the year at issue Ricky has to move around. His employer reimburses him for some, but not all, of his travel expenses from MN to Ashburn, VA, Newport News, VA, and Salisbury, MD, where he manages constructions.

Ricky claims standard mileage unreimbursed business expenses, and for all but 2%, his records, which match those of his employer, jump the Section 274 strict substantiation hurdle. Even the 2% is uncertain, but Ricky has burden of proof, so Judge Morrison gives IRS the disallowance.

Ricky even paid $151K for a “mobile home” (Transcript, at pp. 3-4), on which he wants to deduct depreciation.

Probably a fifth-wheel, Judge. “He lived in the mobile home at the jobsites. He moved the mobile home using the truck when he had to move the mobile home.” Transcript, at p. 4.

IRS says Ricky has no tax home, because all his jobs were temporary, and his MN home was strictly for Ricky’s and Ros’ convenience.

No, says Judge Morrison, even though Ricky lived in MN for years, he has business reasons as well as personal ones for living there. “First, Minnesota was the state where he was licensed. Second, his house in Minnesota was where he kept his construction-related files. Third, Mr. Ressen worked on construction sites in Minnesota in years other than the year at issue. Thus, Mr. Ressen had an adequate business justification for
maintaining a home in Brainerd.” Transcript, at p. 9.

So Ricky gets the mileage.

But the depreciation is about what Ricky’s employer gave him for travel allowance.

“…the weekly payment Mr. Ressen received to cover lodging expenses corresponds to the depreciation of Mr. Ressen’s mobile home. Although it is possible that a portion of the weekly reimbursement for lodging expenses could be characterized as reimbursing Mr. Ressen for things other than the depreciation expense for the mobile home, we do not have enough information in the record to estimate what portion should be so characterized.” Transcript, at p. 19.

Ricky showed good faith, but the Section 6662(d)(1)(A) understatement chop was electronically-calculated, so no Section 6751 Boss Hoss sign-off necessary. The Rule 155 beancount will show if Ricky hit the five-and-ten.

 

 

 

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