Information needed to deduct expenses for use of business auto, travel, meals, entertainment & apparel

 

 

 

Section 274 prescribes specific documentation requirements for travel, entertainment and expenses for listed property. Documentation requirements are more stringent. So the importance of substantiation cannot be overemphasized, especially in the area of travel, meals and entertainment. The taxpayer should completely document these expenses as they occur to secure the deductions. Records cannont be created after the fact. Failure to have the below documention will result in no deduction allowed by the IRS. The so-called Cohan rule that allows taxpayers sometimes to estimate the amount of certain business expense is not available for travel, meals and entertainment expenses.

BUSINESS AUTO:

Information needed to deduct expenses for use of business auto:

Total miles drive for year. Ending mileage reading. Beginning mileage reading.
Breakdown of the business, personal & commuting miles driven for the year.
Business miles for the year
Date vehicle place in service
Make & model
Type of vehicle
Gross Vehicle Weight 6000 lbs, less, more?
Written record should be maintained in an account book, diary, log, sheet/book of
business use.
Was another vehicle available for personal use?
Was this auto available for personal use during off-duty hours?

we will need this for ea. auto used on business please.

TRAVEL, MEALS & ENTERTAINMENT:

Travel, meals & entertainment: Substantiation Requirements: must be for a business
purpose, ordinary & necessary. Taxpayers are required to maintain an account book, diary,
log, trip sheet or similar records as well as documentary evidence such as receipts and
cancelled checks. Under examination you will be asked to substantiate the amount, time,
place and business purpose of the expenditures. For Meals & entertainment you need to say
who you met with and what was the topic of discussion. If you have all of this
substantiation fine. If not please inform us at once.

APPAREL:

To be deductible the cost and upkeep of apparel
(uniforms & special clothing) must: 1) Be required as a condition of employment and 2)
not be adaptable to everyday wear. So we are talking about uniforms, special apparel with
a company logo or other clothing designed strictly for the workplace. Again, please let
me know if this criteria isn't met

 


Last Updated: August 25, 2009

Back To Current Client News Links

Back To Troast Consulting Home