Cell phone deductions and other listed property. (Expenses).
To claim a business deduction for listed property, taxpayers must follow the Sec. 274(d) substantiation rules. They must be able to substantiate the amount of the expenditure or use, the time and place of the expenditure or use and its business purpose. Under Temp. Regs. Sec. 1.274-5T(c), taxpayers can substantiate an expenditure or use with a written log or a sampling supported by collateral evidence. For example, a taxpayer could keep a log to determine business use of his automobile for the first 90 days of the year and then use that percentage for the entire year. For a cell phone, a taxpayer could note, using his phone bill, the time, amount and place of calls for the first week of every month, calculate the business use and apply that percentage for the entire year. Without this documentation, the IRS may deny a taxpayer's business deductions for listed property, as was the case in Fabian Vaskman, TC Memo 2001-165, and Kevin R. Johnston, TC Memo 2000-315. Umit Tarakci, TC Memo 2000-358, is an example of a case in which deductions for cell phone use were substantiated properly.
FROM KATHY DREIER, VONLEHMAN & COMPANY, INC., FORT MITCHELL, KY
|Printer friendly Cite/link Email Feedback|
|Author:||Koppel, Michael D.|
|Publication:||The Tax Adviser|
|Date:||Dec 1, 2001|
|Previous Article:||Valuing closely held businesses. (Estates, Trusts & Gifts).|
|Next Article:||Ninth Circuit allows basis allocation to expected property rights.|