Tax Alert: Taxpayer’s Claim for Expenses Disallowed Due to Court Sanctions
A taxpayer conducted a life coaching and family advocacy business from her car and hotel rooms because she didn’t have a fixed office. On her Schedule C for 2009, she reported significant business expenses, including those for travel, moving, storage, car, cell phone, and gifts. On audit, the IRS disallowed the expenses, resulting in a tax deficiency of $21,557. The taxpayer took the case to the Tax Court, but she repeatedly failed to comply with Court orders on providing documents and appearing before the Court. Due to the taxpayer’s failure to cooperate, the Court sanctioned her by not allowing her to present certain documents, which effectively prevented her from substantiating her claimed business expense deductions. Lisa A. Nkonoki, TC Memo 2016-93 (Tax Ct.).
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