- Parent Category: ROOT
- Wednesday, 22 June 2011
- Published Date
- Written by Bob Scott
Most tax professionals would like their clients to keep better records. And probably aren't too many ways to better demonstrate the importance of records to them than the recent case of the woman who won a victory over the Internal Revenue Service regarding her care for feral cats. But she lost most of the deduction she claimed because of her recordkeeping.
Records are something many consumers think of when tax time approaches, not at the time that expenses were incurred and should have been noted.
However, much of the $12,068 she claimed as a charitable contribution on her 2004 tax return was disallowed. The court allowed individual expenses of under $250. But since Van Dusen didn't have contemporaneous acknowledgment for expenses of more than $250, at least $5,400 in expenses were disallowed. It was not possible to tell from the decision some of the amounts rejected since the court merely identified them by check number.
But what they had in common was that there was no clear indication of what the expenditures for and some purchases clearly combined allowable and non allowable amount or simply had a total for purchases at a single day at home center outlets. The court says it was not possible to determine how some expenses were calculated.
Van Dusen would not have won every deduction she claimed even with good records. But if there had been proof, she probably would have been able to deduct most.
And when it gets down to it, who wants to win a philosophical victory regarding the ability to contribute a particular service, but not be able to realize the savings? Meticulous recordkeeping is the big difference between winning and really winning.