Taxpayers couldn’t substantiate business deductions. A married couple deducted car and truck expenses for their home-building S corporation’s alleged use of a passenger vehicle. But the IRS and the U.S. Tax Court denied them. The taxpayers didn’t provide a log or other evidence showing the business use of the vehicle. The court found that the couple also wasn’t entitled to home office deductions because they didn’t provide any proof to show that a portion of their residence was exclusively used for business or how they calculated the deductions.
The IRS has added five compliance campaigns to its Large Business & International Division’s 40-prong audit strategy. The new areas are: 1) claims for additional domestic production activity deductions under former IRC Sec. 199, 2) syndicated conservation easement transactions, 3) the manufacturing branch rules for foreign base company sales income, 4) interest and home office expenses of foreign corporations filing Form 1120-F (“U.S. Income Tax Return of a Foreign Corporation”), and 5) individuals employed by foreign governments and international organizations.