Tax Court in Brief | Harwood v. Commissioner

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Tax Litigation: The Week of February 14 – February 18, 2022

Harwood v. Comm’r, T.C. memo. 2022-8 | February 15, 2022  | Urda, J. | Dkt. No. 425-19

Opinion

Short Summary: This case focuses on the deductibility of unreimbursed employee expenses incurred by taxpayer (James Harwood) while working as a construction worker for various employers over the tax years in issue. The work required that Harwood leave his home for significant “chunks of time,” and through his tax returns, he sought to deduct unreimbursed expenses for meals and entertainment, lodging, vehicle, and other incurred during such employment. The IRS issued a deficiency based on the disallowance of a portion of Harwoods’ claimed deductions. Harwood challenged that decision.

Primary Holdings:

Key Points of Law:

Insights: To deduct employee business expenses, a taxpayer must prove that he or she did not receive, nor have the right to receive reimbursement from his or her employer. The taxpayer must have and maintain adequate records, contemporaneously made with the expense, to justify the available deduction. Travel logs, odometer readings, and other contemporaneous records to show the time, place, and business purpose for an expense are critical to appropriately substantiate entitlement to a deduction for an expense incurred in carrying on a trade or business, including services as an employee. For deductibility of mileage expenses for driving to or from a work site, as well as for meal and other expenses, the taxpayer must evaluate whether or not the expense is incurred “while away from home,” as that term or phrase is defined in the Code and is construed by the courts and the Commissioner.