Business Expenses | TaxConnections

15 Jun 2022

Tax Court In Brief: Disallowance Of Taxpayer’s Deductions

Spencer v Commissioner, T.C. Memo. 2022-8 | June 7, 2022 | Marshall, J.| Dkt. No. 17106-19S

Short Summary: This case involves the disallowance of taxpayer’s deductions regarding (1) contract labor expenses, (2) car and truck expenses, and (3) repairs, and maintenance expenses for not meeting substantiation requirements. In tax years 2016 and 2017, Brandon Spencer (Spencer) operated Home Comfort Transportation LLC (Home Comfort), a business that offered non-emergency transportation services to medical patients. As part of its business, Home Comfort purchased and maintained vehicles and had full-time and part-time drivers who were paid by check and cash, respectively. Cash compensation payments were not documented. Additionally, Spencer retained receipts for vehicle rentals, purchases and tolls, invoices from repairs, an insurance statement, and vehicle registration records. On his tax returns for years 2016 and 2017, Spencer claimed Schedule C itemized deductions for Home Comfort’s expenses, including contract labor and vehicle-related expenses. The IRS selected Spencer’s returns for examination and IRS issued a notice of deficiency (IRS CP3219A Notice) to him. Spencer filed a petition with the Tax Court and, after concessions by the IRS, the issue remaining for trial regarded deductions for expenses for contract labor and vehicle-related expenses.

Key Issues:

Written by Jason Freeman | Posted in Business Deductions • Business Expenses

25 Mar 2021

How To Avoid IRS Tax Problems With Business Expenses

Do you spend money on your business throughout the year? If you’re a business owner, I’m sure you do. While some of those costs can be deducted from your tax return, not all business expenses qualify. Learn what types of costs you can deduct, as well as what it means to overstate your business expenses – and what penalties you might face from the IRS if you do.

Key Insights We Will Discuss

What counts as a business expense
Separating your expenses
Types of expenses you can deduct on your tax return
What is means to overstate your business expenses
Penalties for making false deductions on your returns

What Counts as a Business Expense?

Written by TaxConnections Admin | Posted in Avoid IRS Tax Problems • Business Expenses

14 Jun 2019

New Rules And Limitations For Depreciation And Expensing Under The Tax Cuts And Jobs Act

Businesses Can Expense More Under The New Law

A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. For taxable years beginning after 2018, these amounts of $1 million and $2.5 million will be adjusted for inflation.

The new law also expands the definition of section 179 property to allow the taxpayer to elect to include the following improvements made to nonresidential real property after the date when the property was first placed in service:

Written by Kat Jennings | Posted in Business Expenses • IRS Notice