Opinion ID: 2655854
Heading Depth: 3
Heading Rank: 2

Heading: Unsubstantiated expenses

Text: As noted earlier, the tax court concluded it was unnecessary to evaluate whether McLauchlan’s automobile expenses were reimbursable, even though AR’s partnership agreement required him to incur them, because the tax court found he could not meet the substantiation requirements for a deduction. The tax code provides that in order to claim certain types of deductions, including deductions related to passenger automobiles, a taxpayer must meet strict substantiation requirements. I.R.C. §§ 274(d), 280F(d)(4)(A)(i). McLauchlan’s claimed automobile deductions stem from his use of two passenger automobiles subject to these requirements. In order to claim deductions for his business use of an automobile, McLauchlan must substantiate (1) the amount of each separate expenditure, (2) the mileage for each business use and total mileage for all business use of the automobile, (3) the date of the expenditure or use, and (4) the business purpose for the expenditure or use. Temp. Treas. Reg. § 1.274-5T(b)(6). McLauchlan did not maintain records indicating the amount of business use and total use, the dates of any business use, or the purpose of any business use for the automobiles. We agree with the tax court’s determination and conclude McLauchlan was not entitled to deduct the automobile expenses due to his failure to meet the substantiation requirements of Section 274. Having concluded McLauchlan was not entitled to any of the claimed deductions for unreimbursed partnership expenses, we turn now to the tax court’s assessment of accuracy-related penalties. 10 Case: 12-60657 Document: 00512551524 Page: 11 Date Filed: 03/06/2014 No. 12-60657