I said that I would not help this client. He is the one that went to an audit without me and carried copies of many years’ returns to hand over to her. More on this client is under the topic of “Audit Without Representation”.
He has motel receipts for Sch C. He does not have the mileage logs, after all, big surprise! The auditor did not allow him to recreate his mileage based on the locations listed on his motel receipts. When I asked the client if he could come close to the original mileage claimed by using his motel locations he assured me that he could. I doubt that too. But I do feel sure that it would be more miles than the auditor allowed him.
Of course, his dog or his ex-girlfriend ate the mileage logs.
This is something I printed more than a year ago that was posted by Brad on the other board. Do you feel this could be used to get the auditor to allow the recreation of the logs based on his motel receipts? Also, he did not claim any meals on the original return because he did not keep up with them. However, he probably has some proof of meals on his credit card statements.
In the original post Brad suggested asking the auditor if she feels the TP is a liar, if she says no then have the client write on a piece of paper that the credit card statements and in this case, motel receipts represent legitimate business expenses. Have the client sign the statement and hand it to the auditor. Then tell her that she can accept your client’s written statement as meeting the substantiation requirements under Regulation section 1.274-5A(c) (3) which says:
§ 1.274-5A Substantiation requirements.
(3) Substantiation by other sufficient evidence. If a taxpayer fails to establish to the satisfaction of the district director that he has substantially complied with the “adequate records” requirements of subparagraph (2) of this paragraph with respect to an element of an expenditure, then, except as otherwise provided in this paragraph, the taxpayer must establish such element:
(i) By his own statement, whether written or oral, containing specific information in detail as to such element; and
(ii) By other corroborative evidence sufficient to establish such element.
If such element is the description of a gift, or the cost, time, place, or date of an expenditure, the corroborative evidence shall be direct evidence, such as a statement in writing or the oral testimony of persons entertained or other witness setting forth detailed information about such element, or the documentary evidence described in subparagraph (2) of this paragraph. If such element is either the business relationship to the taxpayer of persons entertained or the business purpose of an expenditure, the corroborative evidence may be circumstantial evidence.
In this same thread another poster suggested presenting the regulation and then saying to the auditor. "Of course, our citation must be considered in the context of the citation you will offer in support of your position that receipts are not adequate substantiation. Present your position on substatiation and we will argue the merits."
He has motel receipts for Sch C. He does not have the mileage logs, after all, big surprise! The auditor did not allow him to recreate his mileage based on the locations listed on his motel receipts. When I asked the client if he could come close to the original mileage claimed by using his motel locations he assured me that he could. I doubt that too. But I do feel sure that it would be more miles than the auditor allowed him.
Of course, his dog or his ex-girlfriend ate the mileage logs.
This is something I printed more than a year ago that was posted by Brad on the other board. Do you feel this could be used to get the auditor to allow the recreation of the logs based on his motel receipts? Also, he did not claim any meals on the original return because he did not keep up with them. However, he probably has some proof of meals on his credit card statements.
In the original post Brad suggested asking the auditor if she feels the TP is a liar, if she says no then have the client write on a piece of paper that the credit card statements and in this case, motel receipts represent legitimate business expenses. Have the client sign the statement and hand it to the auditor. Then tell her that she can accept your client’s written statement as meeting the substantiation requirements under Regulation section 1.274-5A(c) (3) which says:
§ 1.274-5A Substantiation requirements.
(3) Substantiation by other sufficient evidence. If a taxpayer fails to establish to the satisfaction of the district director that he has substantially complied with the “adequate records” requirements of subparagraph (2) of this paragraph with respect to an element of an expenditure, then, except as otherwise provided in this paragraph, the taxpayer must establish such element:
(i) By his own statement, whether written or oral, containing specific information in detail as to such element; and
(ii) By other corroborative evidence sufficient to establish such element.
If such element is the description of a gift, or the cost, time, place, or date of an expenditure, the corroborative evidence shall be direct evidence, such as a statement in writing or the oral testimony of persons entertained or other witness setting forth detailed information about such element, or the documentary evidence described in subparagraph (2) of this paragraph. If such element is either the business relationship to the taxpayer of persons entertained or the business purpose of an expenditure, the corroborative evidence may be circumstantial evidence.
In this same thread another poster suggested presenting the regulation and then saying to the auditor. "Of course, our citation must be considered in the context of the citation you will offer in support of your position that receipts are not adequate substantiation. Present your position on substatiation and we will argue the merits."
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