A Reminder to “Log” Travel Expenses

As business travel picks back up, a court ruling within the past 12 months brings to light the importance of maintaining records for travel-related tax deductions. The case involves a timberland owner who barely escaped IRS fines after his travel logs were stolen.

As Accounting Today summarizes, the taxpayer traveled every week to maintain and monitor commercial timber on more than 100 acres of land, with each round-trip totaling about 300 miles. Within one year, he had logged a total of 47 round trips. While the taxpayer maintained a log listing the days he visited and stayed on the properties, those logs and the other records were stolen when the building in which he kept them was vandalized.

The missing logs created a problem with the IRS.

“The IRS didn’t contest whether the travel expenses were ordinary or necessary business expenses or if they were incurred while the taxpayer was away from his tax home. Rather, they contend that the taxpayer has not adequately substantiated the expenditures,” Accounting Today Columnist Ken Barry wrote.

The Tax Court sided with the taxpayer because a regular pattern of travel was established. He always traveled to the same locations and usually at the same intervals and lengths of time. That pattern, coupled with his testimony about keeping a log was credible, saved him from penalties. He did, however, receive a slap on the wrist for claiming too much for meals and incidental expenses.

Although the taxpayer won (mostly), the case is a good reminder that the IRS is watching when it comes to travel deductions. Brush up on what the IRS considers deductible business travel expenses and how it defines adequate recordkeeping. As your travel patterns and places of work (home versus the office, for instance) may have changed this year, so might the rules as they pertain to your situation. And don’t forget to re-check per diem rates, which were updated for 2021 as of October 1. Have questions? Feel free to contact us.

Photo from 123rf.com

October 20, 2020

Client Spotlight

In the eyes of the IRS, student-athletes landing NIL deals are now self-run businesses. Learn the tax implications and four golden rules critical to their…
Disputes in closely held businesses rarely stem from simple math errors. Instead, they arise from “creative” accounting that obscures the business’s true economic reality….
While you might not be signing an addendum with the Acting Attorney General, you CAN use closing agreements and statutes of limitation to create your…
When building wealth in Texas, poor planning can result in hefty taxation as you earn your way to the top….
A new precedent is forming in the tax courts that can cost even innocent taxpayers hundreds of thousands of dollars….
George Clooney’s recent relocation to France highlights a complex financial dilemma: maintain dual citizenship and face dual tax systems, or renounce U.S. citizenship and trigger…
A business seizure is a last-ditch effort following many other attempts at tax collections. Here’s what to watch for and how to respond….
How do you go from zero sales to 800% growth while maintaining a medical career? Dr. Paul Pallan shares his story of dual-career success and…
Tax preparer oversight might soon be getting a rehaul thanks to a bipartisan Senate bill that aims to impose stricter standards and penalties for misconduct….
From U.S. Navy technical training to founding J. Anthony’s Refrigeration in 1988, learn how John Bianchi’s commitment to excellence and high-level expertise built a trusted…
Thinking about a business partnership? This checklist will tell you what to discuss with your tax and legal advisors….
Can the IRS contact your neighbors or boss? Learn the rules for third-party investigations, your right to advance notice, and how to protect your privacy….

Blogs and Articles

College Athlete NIL Tax Implications: When Fantasy Becomes Reality

In the eyes of the IRS, student-athletes landing NIL deals are now self-run businesses. Learn the tax implications and four golden rules critical to their...

College Athlete NIL Tax Implications: When Fantasy Becomes Reality

Read More

Profit-Sharing Disputes: IDing What Went Wrong

Disputes in closely held businesses rarely stem from simple math errors. Instead, they arise from "creative" accounting that obscures the business's true economic reality....

Profit-Sharing Disputes: IDing What Went Wrong

Read More

What’s the Deal with Trump’s Forever Tax-Immunity Loophole?

While you might not be signing an addendum with the Acting Attorney General, you CAN use closing agreements and statutes of limitation to create your...

What’s the Deal with Trump’s Forever Tax-Immunity Loophole?

Read More

Secret Texas Wealth Tax Traps

When building wealth in Texas, poor planning can result in hefty taxation as you earn your way to the top....

Secret Texas Wealth Tax Traps

Read More

How Long to Keep Tax Records? Forever Might Be Best 

A new precedent is forming in the tax courts that can cost even innocent taxpayers hundreds of thousands of dollars....

How Long to Keep Tax Records? Forever Might Be Best 

Read More

George Clooney’s Exit Tax Dilemma

George Clooney's recent relocation to France highlights a complex financial dilemma: maintain dual citizenship and face dual tax systems, or renounce U.S. citizenship and trigger...

George Clooney’s Exit Tax Dilemma

Read More

Avoiding a Business Seizure for Nonpayment of Taxes

A business seizure is a last-ditch effort following many other attempts at tax collections. Here’s what to watch for and how to respond....

Avoiding a Business Seizure for Nonpayment of Taxes

Read More

4NS-Supply

How do you go from zero sales to 800% growth while maintaining a medical career? Dr. Paul Pallan shares his story of dual-career success and...

4NS-Supply

Read More

Better Tax Preparer Oversight May Be on the Way

Tax preparer oversight might soon be getting a rehaul thanks to a bipartisan Senate bill that aims to impose stricter standards and penalties for misconduct....

Better Tax Preparer Oversight May Be on the Way

Read More

J. Anthony’s Refrigeration

From U.S. Navy technical training to founding J. Anthony’s Refrigeration in 1988, learn how John Bianchi’s commitment to excellence and high-level expertise built a trusted...

J. Anthony’s Refrigeration

Read More

Business Partnership Structure: 6 Things to Consider 

Thinking about a business partnership? This checklist will tell you what to discuss with your tax and legal advisors....

Business Partnership Structure: 6 Things to Consider 

Read More

During an IRS Investigation: Are Friends & Neighbors Contacted?

Can the IRS contact your neighbors or boss? Learn the rules for third-party investigations, your right to advance notice, and how to protect your privacy....

During an IRS Investigation: Are Friends & Neighbors Contacted?

Read More

How the New SALT Cap Affects Texas Pass-Through Businesses

How the One Big Beautiful Bill Act substantially changed the SALT Cap rules for Texas pass-through businesses....

How the New SALT Cap Affects Texas Pass-Through Businesses

Read More

Small Business Tax Breaks Back on the Table

How does the latest federal tax bill enhance small business tax breaks?...

Small Business Tax Breaks Back on the Table

Read More

IRS Crackdown on Millionaires Is a Sweeping Success

By ramping up enforcement on high-income earners, the IRS has recovered over $500B in back taxes from millionaires. What does this mean for the future...

IRS Crackdown on Millionaires Is a Sweeping Success

Read More

Now Accepting New Clients

Let’s Start the Conversation

Let’s take a look at your finances together. We offer a complimentary 1-hour call to review your past tax returns. If we see a way to help you, we will.

Want to receive tax strategies and tips direct to your inbox?

Name(Required)