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IRS Audits Recordkeeping Tax Procedure

Can IRS Rely on Third Party Reports to Identify Taxable Income?

If a third party collects monies for you and send you a report reflecting the monies but the reports show too much income, should you be taxed on the higher income or what you actually received? The Ghadiri-Asli v. Commissioner, T.C. Memo. 2019-142, case addresses this. Facts & Procedural History The taxpayer is a physician. […]

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Recordkeeping Tax Procedure

Court Considers Medical Marijuana Company Substantiation

Medical marijuana companies face a number of challenges. The Section 280E limitation on business deductions is one example. There have been a number of court cases that address this limitation. The Feinberg v. Commissioner, T.C. Memo. 2017-211, case addresses a medical marijuana company’s efforts to substantiate cost of goods sold in light of the Section […]

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Employment Tax IRS Audits Recordkeeping Tax Procedure

Court Says Employer Entitled to Worker’s IRS Records

When the IRS determines that independent contractors are taxed as employees, it is up to the employer to show that the IRS determination is incorrect. One way to do this is to show that the workers paid tax even though the employer did not withhold the tax. In Mescalero Apache Tribe v. Commissioner, 148 T.C. […]

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Recordkeeping Tax Procedure

How Long Do You Keep Your Tax Records?

Taxpayers often ask how long they have to keep their tax records. Many taxpayers only keep records for three to six years. In Reyonoso v. Commissioner, T.C. Memo. 2016-185, the court considered a case that turned on whether the taxpayer could produce records to support that he had made a mark-to-market election nearly twenty years […]

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Recordkeeping Tax Procedure

Limits on IRS’s Ability to Ask for Records Multiple Times

If the IRS conducts an audit for one year and reviews records, but fails to keep the records and then conducts an audit for a second year, is the taxpayer obligated to provide a second copy of the records the IRS failed to keep from the first year?  The court addressed this in United States v. […]

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Recordkeeping Tax Procedure

Truck Driver Expenses Not Subject to Higher Substantiation

The absence of records results in the disallowance of tax deductions and credits on audit.  This is particularly true for expenses that are subject to the higher substantiation requirement in Section 280F, such as travel expenses.  In Baker v. Commissioner, T.C. Memo. 2014-122, the court considered whether a truck driver’s transportation expenses are subject to the […]

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Recordkeeping Tax Procedure

Truck Expenses Not Deductible Due to Inadequate Mileage Log

In Houchin v. Commissioner, T.C. Summary Opinion 2014-29, the U.S. Tax Court concluded that truck expenses were not deductible as the mileage log did not note the locations the taxpayer traveled to. Facts & Procedural History  Mr. Houchin worked as a truck driver, but was unemployed in 2010. He collected unemployment compensation. Mr. Houchin also […]