The taxpayers were entitled to Schedule A deductions for 20 for vehicle mileage on behalf of their respective employers.The issues for decision were whether petitioners were (1) entitled to Schedule A deductions for 20, (2) entitled to Schedule C deductions for 20, and (3) liable for accuracy-related penalties under section 662(a) for 20. IRS asserted accuracy-related penalties for substantial understatements of tax under section 6662(a) and (b)(2) for both years. IRS also disallowed $19,534 of deductions petitioners claimed on their 2016 Schedule A and disallowed all deductions claimed on Schedules C for 20. The Notice of Deficiency disallowed all Schedule A deductions and applied the standard deduction to petitioner’s 2015 return. IRS issued the Notice of Deficiency on November 7, 2018. On August 6, 2018, an IRS agent made the initial determination to assert accuracy-related penalties for 20, and on August 7, 2018, the agent’s immediate supervisor approved the penalty. At trial petitioner admitted receiving financial assistance from other family members for her father’s medical expenses. Moody’s teaching expenses, and receipts for certain medical expenses on behalf of wife’s father, as well as some medical expenses incurred for themselves. Additionally, petitioners only substantiation of their Schedule A expenses were contemporaneous mileage logs while travelling, certain bank statements and receipts relating to Mr. Patitz did not provide any records, bank statements, itemized receipts, or credit card statements substantiating her 2015 or 2016 Schedule C expenses. The petitioners also claimed Schedule C deductions for business use of home, meals and entertainment, supplies, repairs and maintenance, legal and professional services, insurance, utilities, office, car and truck, travel, and mortgage interest. On their 20 joint income tax return petitioners claimed Schedule A deductions for their various businesses expenses which included vehicle expenses, meals and entertainment expenses, tool and supply expenses, uniform expenses, other business expenses, and medical expenses. Moody began a new career as a teacher in Jacksonville, FL. He had to travel to the employer’s warehouses weekly and occasionally had to stay overnight in hotels. His service area spanned from Vero Beach, FL to Key West, FL and his job duties required him to deliver “on demand” packages to clients in the service area. Moody was employed as an area manager for a courier service. Her weekly mileage expenses only accounted for her local trips in Jacksonville. Her employer reimbursed her for travel expenses incurred outside of her home base in Jacksonville, FL. Patitz’s job responsibilities for the copying company required her to travel to client sites in Central Florida. Patitz was an account executive with a copying company and she also operated her own insurance business selling supplemental insurance policies. Petitioners were husband and wife that jointly filed their tax return for the years at issue. Short Summary: This case involves taxpayers’ entitlement to Schedule A itemized deductions and Schedule C deductions and the taxpayers’ obligation to substantiate those expenses to which the deductions were related were paid or incurred for the 20 tax years. Summary Opinion 2022-20| Septem| Paris, Judge | Dkt. Tax Litigation: The Week of September 26th, 2022, through September 30th, 2022 The Tax Court in Brief – September 26th – September 30th, 2022įreeman Law’s “ The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.įor a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.
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