Attorney-at-Law

SPREADSHEETS

In Uncategorized on 03/08/2021 at 19:20

Spreadsheets are popular. Spreadsheets are useful. Universally available software makes compiling and producing spreadsheets easy.

Spreadsheets are useless for substantiating tax deductions. The sad fact is, you still need back-ups.

Ask Abrahan Pichardo and Carolina Pichardo, 2021 T. C. Sum. Op. 7, filed 3/8/21. They gave spreadsheets to their trusty preparer (qualifications not stated, but as IRS conceded the accuracy chop, it doesn’t matter), showing Abrahan’s Section 2106s for his loss prevention work.

But the reimbursements from Abrahan’s employer, and any Section 274 documentation, never make it into the trial.

The reimbursement issue sinks Abrahan’s deductions, but I want to note what STJ Peter Panuthos says about spreadsheets. As is often the case, there’s good stuff in footnotes.

“Although we find for respondent on a separate ground, we note that Mr. Pichardo’s records were generally insufficient to substantiate his reported business expenses. Mr. Pichardo submitted into evidence a spreadsheet entitled ‘2016 Expense Report Totals’ listing, among other expenses, amounts purportedly spent on gas, hotels, airfares, rental cars, and overnight meals. Each of these categories is subject to the strict substantiation rules of sec. 274(d), and thus the amounts cannot be estimated. Apart from a single airline invoice and a document entitled ‘Summary of Tolls per Transponder / Vehicle’ (toll invoice), Mr. Pichardo did not provide the Court with additional substantiating receipts, invoices, or other documentary evidence.” 2021 T. C. Sum. Op. 7, at p. 10, footnote 4.

The toll story is also a wee bit dodgy, says STJ Panuthos. “Mr. Pichardo did submit documentary evidence that $544 in tolls and $110 in fees associated with eight different toll transponders were prepaid by some party in 2016. However, the toll invoice did not list Mr. Pichardo as the payor. Nor did Mr. Pichardo provide additional evidence connecting him to the account number listed on the document. Additionally, his testimony was unclear as to why he would have used eight different transponders in a single year and whether any of the transponders listed on the toll invoice were associated with his vehicle.” Ibid., at p 11.

Eight (count ’em, eight) transponders would work if Abrahan constantly rented cars for work-related trips. Different cars from same rental company would generate same payor but different transponder codes. No evidence of that. Maybe trusty preparer should have looked closer and asked.

Abrahan has problems with his American Opportunity Tax Credit. Yes, he took relevant courses at a well-respected university, but couldn’t show he was a half-time student.

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