Case: Taxpayers Unable to Deduct Various Expenses for Lack of Adequate Substantiation (T.C. Memo) (IRC §162)

Deductions claimed in tax years 2015, 2016, and 2017 by married taxpayers for various expenses related to a Schedule C business operated out of petitioners’ home, charitable contributions, and interest on a mortgage secured by rental property were permissible, but only to the extent adequately substantiated, the Tax Court held in a memorandum opinion. While some advertising expenses were allowed, the court upheld the disallowance of deductions for other claimed business expenses that petitioners were required to capitalize rather than deduct currently and deductions limited by I.R.C. §280A(c)(5) because expenses exceeded gross receipts. The court also decided that a portion ...