Thomas Laronn Mitchell v. Comm., TCS 2023-9
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.
No Records Plus Conflicting Records Plus Self-Serving Testimony Equals No Deductions (Thomas Laronn Mitchell v. Comm., TCS 2023-9)
The Tax Court just could not bring itself to allow any deductions in this case. You will probably agree. Mr. Mitchell attempted to substantiate $22,499 in car and truck expenses with a mileage log showing 81,186 business miles in 2018. State inspection records covering a 12-month period that included most of 2018 revealed a mileage difference of only 21,816 miles. The mileage log also had some date issues: while driving in Dallas, TX he submitted a hotel receipt for a stay in Miami, FL; while driving in Charlotte, NC he submitted a hotel receipt for a stay in Houston, TX. To explain the geographical discrepancies, Mitchell testified that his clients were driving his car. Gross receipts for 2018 were $0.
To substantiate $11,376 in travel expenses, Mitchell submitted $2,635 in hotel receipts. He testified that several hotel expenses were for leisure travel and not business travel. He could not recall which receipts were business related. Additionally, the hotel receipts were altered. To substantiate other deductions, Mitchell attempted to introduce receipts that were “handwritten, partially executed, and displayed receipt numbers that were mostly sequential.” IRS objected on the basis of authenticity. Mitchell could not authenticate the receipts, and the court would not allow them into evidence.