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In Uncategorized on 12/19/2022 at 16:38

Judge Albert G (“Scholar Al”) Lauber is, I have often noted, a man of many attainments. Although an East-Coaster in his youth, he is familiar enough with Los Angeles traffic at rush hour to remark that staying in a hotel in Santa Monica to avoid a 60-mile commute to Irvine “might well have been a rational choice” T. C. Memo. 2022-123, at p. 7.

In fact, it’s enough to spare Section 6662 five-and-ten chops for the hotel bills that IRS disallowed amidst the massed indocumentado deductions of Kambiz Aryia, T. C. 2022-123, filed 12/19/22.

Kam was a long-time car salesman, managing a Honda dealership in Santa Monica, CA. He claimed to be a “consultant” and filed Sched C, but was really an employee, so at best he would have gotten unreimbursed employee business expenses for the last year those were deductible, if he could prove them.

He did prove the hotel bills, but those were for his convenience. His tax home was where he worked. But he did have a good faith belief he could deduct those. And had a winning personality on the trial; no surprise, few grumpy car salespeople last very long.

“Petitioner had comprehensive and accurate documentation for these expenditures. His trial testimony convinced us of his belief that he could not successfully discharge his duties as manager of the Honda dealership if he spent three to four hours every day commuting from Irvine. He understood that he could not deduct commuting expenses. But we think he genuinely believed that his lodging expenses were different and had a logical business nexus, enabling him to work the 60 hours per week required to hold on to his managerial job. We accordingly conclude that petitioner is not subject to penalty on the portion of the underpayment attributable to disallowance of his $40,174 lodging expense deduction.” T. C. Memo. 2022-123, at p. 12.

 

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