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Guinn v. Dep't of Revenue4/19/2005
om the writing to offset those expenses." Perry v. Dept. of Rev., 14 OTR 395, 399 (1998). See IRC § 263A(h)(2), stating that even though qualified creative expenses are not required to be capitalized, qualified creative expenses does "not include any expense related to printing."
Based on the testimony and evidence, the court concludes that the total gross sales for 1999 should be $3,307.99. The court accepts Defendant's cost of goods sold per book in the amount of $3.75 and allows a cost of goods sold deduction in the amount of $1,128,75. As a result, Plaintiffs' gross income for 1999 from the sale of Guinn's books is $2,179.24.
For tax year 2000, Plaintiffs wrote: "With regards to income from sale of books, even though I made it clear and provided documentation showing the sale of 117 books in the year 2000 you see that the conference officer totally disregarded this information to come to her own conclusions that she would 'allow 33 books.'" (Guinn's letter at 4, Jan 16, 2005; Ptfs' Ex Item 10A at 1.) In support of their letter and the number of books sold, Plaintiffs submitted a handwritten note, stating "missing books sold to Appalachian & Ingram." (Ptfs' Ex Item 10A at 12.) Further, Plaintiffs provided other documents showing shipments to Book World Services/CDS and WinePress Publishing of 71 books. (Ptfs' Ex Item 10A at 10.) Plaintiffs did not offer any explanation or reconciliation of these shipments with Guinn's determination of the number of books sold in 2000.
Based on Plaintiffs' evidence and testimony, the court accepts Plaintiffs' conclusion that 117 books were sold by Guinn in 2000, resulting in gross receipts in the amount of $1,285.83.
As previously stated, the evidence supports a retail price of $10.99 for the book and a cost of goods sold amount of $3.75 per book. After deducting cost of goods sold in the amount of $438.75, Plaintiffs' gross income from the sale of Guinn's books for tax year 2000 is $847.08.
B. Business Mileage
For tax year 1999, Plaintiffs claimed a business deduction for the use of their automobile in the amount of $1,178.00. (Def's Ex D-8.) The conference officer wrote that " n 1999, a mileage rate of $.325 cents was allowed per mile. Therefore, you claimed 3,625 business miles." (Def's Ex A-2.) The auditor and conference officer denied the deduction because they concluded that Plaintiffs failed to maintain a log that substantiated the deduction and, further, each questioned the business purpose of the mileage claimed by Guinn. (Def's Exs A-1; A-2.)
In order for a taxpayer to deduct the miles traveled in his personal automobile as a business expense during a taxable year, a taxpayer must substantiate by adequate records or by sufficient evidence corroborating his own statement: (1) the amount of the expenditure; (2) the mileage for each business use of the automobile and the total mileage for all uses of the automobile during the taxable period; (3) the date of the business use; and (4) the business purpose of the use of the automobile. Treas Reg § 1.274-5T(b)(6). While the Internal Revenue Service regulations do not require a specific form of record to be maintained, it is clear that the taxpayer should keep a diary, account book, trip sheet, or something similar, in which entries can be made while the taxpayer has full present knowledge of the reasons for the travel.
See Treas Reg §1.274-5T(c)(2)(i). "A taxpayer is required by section 274(d) to substantiate a claimed expense by adequate records or by sufficient evidence corroborating the taxpayer's own statement establishing the amount, time, place, and business purpose of the expense. Sec. 274(d). Even if such an ex
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