Maribel Gonzalez v. Comm., TCS 2022-13
This post is part of our series on recent important tax cases that may be of interest to accounting, tax, and finance professionals. For more like this, see our Federal Tax Update and California Federal Tax Update, which offer a comprehensive analysis of the year’s most pivotal tax developments.
Clothing Business Schedule C Expenses Including Travel & Auto Allowed (Maribel Gonzalez v. Comm., TCS 2022-13)
Maribel Gonzalez started a clothing design business in Los Angeles as a wholesaler, designing children’s clothing, and hired a patternmaker in Los Angeles. Ms. Gonzales lived and worked in Palo Alto. She drove from Palo Alto to Los Angeles approximately every other weekend to review the patternmaker’s work and deliver supplies. While her records were limited, she did have an excel spreadsheet travel log, indicating the purpose of the travel and estimating the costs of the travel. She also had car maintenance receipts substantiating service performed in March 2015 and March 2016 which supported the mileage claimed.
Spreadsheet and repair receipts good enough for Court. The Court determined that Ms. Gonzalez’s records were sufficient to substantiate the auto and travel expense and indicated that the fact that the IRS permitted the other business expenses lent credence to the Ms. Gonzalez’s claim that she had a legitimate business.
See also.
Frederica S. Brown v. Comm., Tax Court Docket 16604-19 (Mar. 18, 2021) Tax preparer’s mileage log that included “business” as the reason for most trips without any corroborative documents was insufficient to meet §274(d) substantiation requirements.