Daily Tax Report ®

Case: Reconstruction of Business Expenses Not Reliable (T.C. Summ.) (IRC §274)

Oct. 10, 2019, 7:16 PM

Taxpayer’s attempt to reconstruct business records after original records were destroyed by fire does not meet strict substantiation requirements to allow deductions, the U.S. Tax Court held in a nonprecedential summary opinion. Taxpayer, a race car mechanic, was audited for unreported income. After conceding the income issue, Taxpayer attempted to claim additional business expenses. Taxpayer’s records were located at his CPA’s house which burned in a California wildfire in 2017. Taxpayer attempted to reconstruct business records using his checking account and testimony. The court held that the notations on the checking account could not substantiate that the spending incurred for...

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