Business owners can generally deduct ordinary and necessary operating costs on their tax returns if they can show the costs are legitimate. One corporation conceded that it wasn’t entitled to deduct expenses related to an overstatement of costs of goods sold. Also disallowed were expenses for two vehicles the IRS contended were for personal use. The taxpayer disputed that point but provided no business purpose, and the vehicles were listed as “personal assets” on loan documents. Other equipment for which the taxpayer claimed deductions also lacked a business purpose. The taxpayer was charged additional tax and civil fraud penalties for intentionally underpaying taxes. (TC Memo 2024-32). Contact us with questions. © 2024
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Apr