You need your cable for business?

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Diana Coury (a self-employed insurance broker) found herself on the wrong side of the tax law when she deducted 100% of the expenses associated with the apartment she lived in as business expenses as well as 100% of her automobile expenses.  However, considering her lack of documentation and testimony, it seems the IRS was pretty generous reasonable with the expenses allowed.

The IRS allowed 70% of the taxpayer’s claimed deduction for business use of her home and she offered no testimony in court to substantiate the exclusive business use of any area of her apartment home. I’d say the IRS was generous in offering 70% on this one. The court also inquired as to the business use of the cable package that she claimed should be deductible, but strangely enough she couldn’t come up with one. I guess PBS doesn’t run constant specials on CPE for insurance brokers anymore?

On the automobile expenses, the taxpayer brought in her Quickbooks (or whatever software it was – isn’t Quickbooks kind of like Kleenex for book keeping by now) printout of “Auto expenses” with absolutely no substantiation of the business use of the vehicle.¬†With no mileage log or appointment book, the IRS still allowed a 50% deduction for her automobile expenses, but a far cry from the 100% that she thought should have been deductible. Once again, it seems to me that she had the good fortune of finding someone rather friendly at the IRS to run through her case before she took up her ridiculous positions with the tax court.

Source: Tax Court Memo 2010-132