In Uncategorized on 09/01/2022 at 15:47

Since the Tax Cuts and Jobs Act of 2017 cut the unreimbursed employee business expense deduction from Schedule A for years beginning 1/1/2018 and ending 12/31/2025, there will be no such deductions featured in Tax Court once the current crop wind their way through. And I’ll miss the variety, ingenuity, and imagination they bring to the blogger’s table.

George C. Luna, T. C. Sum. Op. 2022-18, filed 9/1/22, manages to survive the dreaded Reg Section 1.274-5T(c)(3) minefield, wherein so many of the unreimbursed come to grief. His “invoices, credit card statements, and receipts related to his trips to Brazil… ” T. C. Sum. Op. 2022-18, at p. 3, satisfy CSTJ Lewis (“The Name That Satisfies”) Carluzzo on that score.

George has been working in the non-profit sector for upwards of thirty years (voluntarily, unlike some of us who find we’re non-profit because we got stiffed). He even has a letter from his employer dated before the year at issue, stating that while George may pay (unspecified) expenses for his employer, there is no reimbursement therefor.

So George is home, right? He has ducked the two biggest traps for the unreimbursed: poor or no documentation, and available but unclaimed employer reimbursement.

Not quite. George’s non-profit employer was strictly State-side. While he was on the board of directors of a Brazilian outfit that did somewhat parallel work, there was no affiliation between the US non-profit and Brazil or the Brazilian. Remember, the unreimbursed employee must be spending money in aid of the employer; and prove it.

“As petitioner sees the matter, the contacts he makes, or has made, from his various travels and professional associations serve to advance the interests of [employer]. According to petitioner, ‘it helps [employer]. There’s no question about it.’  As we see the matter, there are some questions about it.” T. C. Sum. Op. 2022-18, at p. 6.

Like where’s specific evidence how the Brazil trips helped employer? And where’s the substantiation for George’s other unreimbursed travel? George fails on both scores.

George did buy some tax prep software, for which he might have gotten a deduction, were it not for the enhanced 2% AGI knock-out caused by the lost deductions.

IRS concedes the chops.

I’ll welcome these cases back in 2026.


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