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Guinn v. Dep't of Revenue4/19/2005
Reg 1.162-2(b)(1) (emphasis added). The issue of whether a trip is primarily for business, allowing all travel costs to be deducted, or primarily for personal reasons, disallowing the deduction for all travel costs, is a question of fact. The burden of proof to show the travel was primarily business-related is on Plaintiffs. Ballatine v. Commissioner, 46 TC 272 (1966), acq., 1966-2 C.B 4 and IRC Regs.1.162-2(b)(2).
Guinn testified that his interviews with distributors took place in Grand Rapids and his lodging in Michigan was located conveniently between Grand Rapids and the home he sold.
Further, he testified that the "third trip to Michigan" was to transfer the title to the property, which this court has already concluded was personal business. Guinn provided no documentation to the court to support the time he spent talking to distributors in Grand Rapids. However, the fact that he negotiated a contract with another distributor indicates he spent some time on a business activity. Unfortunately, the court has no information to determine the answer to the important question of whether the time spent in Michigan was primarily for business. Without any evidence to carry their burden of proof, the court must deny Plaintiffs' deduction of the travel expenses to Michigan.
On their 2000 tax year income tax return, Plaintiffs claimed airfare expenses in the amount of $611.00 for a four-day trip to Tennessee. Guinn testified that he and his wife traveled to three different cities in two days to promote his book. He wrote that his "publicist Class Promotional Services arranged this" promotional tour to "one church in Erwin, TN and three radio stations (two in Knoxville, TN and one in Bristol, TN)." (Guinn's letter at 4, Jan 16, 2005.)
Based on Guinn's testimony, the court concludes that the primary purpose for the trip was to promote his book. One-half ($305.50) of the expenses claimed for airfare is an allowable business expense. Airfare for Susan J. Guinn is not an allowable business expense as previously discussed.
F. Meals and Entertainment
For tax year 1999, Plaintiffs deducted $170.33 as a business expenses for meals. (Def's Ex D-8.) Defendant's auditor and conference auditor allowed $85.16, disallowing the balance because Plaintiffs failed to substantiate or show a business purpose. In his letter to the court, Guinn wrote that the meal expenses were incurred during Plaintiffs' trip to Orlando and his wife's one-half share of the meal expenses was $26.99. (Guinn's letter at 3, Jan 15, 2005.) Because the court previously concluded that travel expenses incurred by Susan J. Guinn are not allowable deductions, the court accepts Defendant's disallowance of $26.99 for Susan J. Guinn's meal expenses.
With respect to the meals expense disallowed by the auditor and conference officer, Guinn wrote that, " he other expenses relate to meetings with fellow employees, business associates, etc. who were helping in the promotion of the Book. The Re-Declare Group was the name given to a group of volunteers who helped in the promotion of the book in that part of the title of the Book * * *. The charges for this group of six individuals to meet were $32.50." (Guinn's letter at 3, Jan 15, 2005.) Guinn testified that the promotion of his book was discussed with those six volunteers during the meal. The court agrees with Plaintiffs that $32.50 is an allowable business expense.
The balance disallowed by Defendant for a business meal expense is accepted by the court. Guinn offered a generalized response to the requirement that a specific business purpose including names of individuals entertained and time is necessary to substantiate a d
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