Deductions must Be Proven

Where’s the proof? Taxpayers engaged in business may be able to deduct reasonable business-related expenses from their gross income, if they provide adequate proof. The IRS denied most of the deductions claimed by one married couple, citing a lack of substantiation. This included utility costs, which weren’t proven to be business related, and mileage logs, which lacked sufficient detail, such as the business purpose of trips. The IRS did allow a deduction for the cost of a messaging service related to the husband’s business. (TC Memo 2017-173)