Business owners can generally deduct ordinary and necessary costs of doing business if they can prove them. One man faced a slew of issues including claims for business deductions such as rent, insurance and utilities, supported only by bank records and profit and loss statements. The IRS called these documents unreliable and insufficient. He also had unreported income for three years. He inappropriately filed his taxes using the head-of-household status, and falsely claimed dependency exemptions for three ineligible children, plus other credits he wasn’t entitled to. He was charged with accuracy-related penalties for understating income and additional tax for filing late. (TC Memo 2024-5). Questions? Contact the Cg Team. © 2024
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