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Guinn v. Dep't of Revenue4/19/2005
eduction for meals. See IRC § 274(d). Without evidence to show the business purpose, the claimed deduction must be disallowed.
To recap tax year 1999, the court concludes that $32.50 is an allowable deduction for business meal expenses prior to the 50 percent limit. The court accepts Defendant's adjustment in the amount of $83.49.
For tax year 2000, Plaintiffs deducted $139.00 for meal expenses during their four-day trip to Tennessee. (Def's Ex C-8.) Defendant allowed a business deduction in the amount of $30.00 before the 50 percent limitation required by IRC § 274. Defendant's conference officer stated that even though the expenses were not identified she decided " n the interest of fairness" to allow slightly more than one-half of the amount claimed for the Tennessee trip as an allowable "meal expense." (Def's Ex A-5.) As previously discussed, the court agrees with Defendant that Susan J. Guinn's meal expenses in the amount of $28.84 are not an allowable business expense.
With respect to the balance ($80.00) of the meal expenses claimed, there were two separate events. One expense, in the amount of $15.00 was claimed for lunch with a prospective tenant and the other was lunch for "Fiscal Staff." (Def's Ex C-39.) Guinn provided no additional information about the lunch for "Fiscal Staff." Absent required substantiation, the court affirms Defendant's adjustment denying the deduction claimed for the "Fiscal Staff" lunch.
In response to Defendant's denial of the deduction for lunch with a prospective tenant, Guinn testified that the lunch meeting was conducted at a time convenient to both him and the prospective tenant. There is evidence that Plaintiffs had identified a tenant, Jeff Edwards, prior to the time of the claimed expense. (Def's Ex C 38-39.) Without evidence identifying the person, the court agrees with Defendant that this expense is not an ordinary and necessary business expense.
For tax year 2000, the court accepts Defendant's adjustment, allowing $30.00 for meal expenses prior to the 50 percent limit.
G. Telephone Expenses
Plaintiffs deducted $1,482.01 as telephone expenses, including $142.24 for AT&T Wireless for tax year 1999. (Def Ex D-23; C-34) In Guinn's letter dated January 16, 2005, at page 3-4, he wrote that "most of the monthly charges in question related to an 800 number maintained so people could call me and special fax services for sending and receiving faxes on the one phone number. The cell phone in question was purchased when the book project was started and service ended when the promotional phase was done in 2000." After reviewing the additional telephone records provided by Plaintiffs, the conference officer allowed a business deduction in the amount of $628.00 even though Plaintiffs failed to properly identify each person or business entity called and the business purpose.
At trial, Plaintiffs did not provide any additional support for the telephone expenses claimed as an allowable business deduction. Guinn testified that he believed the allowable expense should be $1,000.00. He criticized the conference officer for stating that he used the cell phone for personal long distance calls, and the home phone for business calls. Guinn testified that he used long distance calling cards for his personal calls and the cell phone was for business only. Thompson testified that IRC 262 requires that the first line into a personal residence is a non-deductible expense. Defendant submitted copies of Plaintiffs' telephone bills for January, March and September 1999. (Def's Exs B-19 to B-40.)
Plaintiffs ask the court to conclude, based on Guinn's testimony, that the telephone ex
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