Paul L. Caron

Monday, September 13, 2010

Tax Court Denies Prof's Claimed Deductions for Research

The Tax Court on Thursday denied a CUNY tenured math professor's $15,397 deduction for expenses related to his research and writing activities (including $2,108 for a Sony Vaio notebook computer):

Petitioner has, potentially, two trades or businesses. He is employed as a professor of mathematics, and he is engaged in research and writing on mathematical issues. He "wears two hats" but the "hats" are so similar in appearance that it is difficult to tell the difference between them. Because of this circumstance, it is particularly important that petitioner distinguish his research and writing activity from his activity as college professor as well as from his personal activities.

If a particular expense is related to his employment, it might be deductible as an employee business expense on Schedule A, Itemized Deductions. Petitioner would have to show, however, that the expense was not subject to reimbursement from his employer, CUNY. An expense is not deductible as ordinary and necessary to the extent that it was subject to reimbursement by the employer. Podems v. Commissioner, 24 T.C. 21, 22-23 (1955).

For an expense to be deductible as a trade or business expense on Schedule C petitioner must show that the expense is not a personal expense and that the expense is that of a trade or business other than that of his services as an employee. ...

Petitioner's testimony is reasonable; however, he has failed to provide the Court with any adequate records or sufficient evidence to corroborate his own testimony. ... Petitioner has failed to show that he is entitled to Schedule C deductions in excess of those respondent allowed. Because petitioner has failed to adequately substantiate his deductions, the Court need not address the profit objective, trade or business, and startup issues respondent raised in his pretrial memorandum.

Shpilrain v. Commissioner, T.C. Summ. Op. 2010-133 (Sept. 9, 2010).

Update:  Tax Update Blog, Cryptographer Fails to Crack the Secrets of Sec. 274

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Tracked on Sep 13, 2010 8:21:28 AM


Is there more information? It appears that he does not have receipts to show he actually incurred the claimed expenses rather than my initial impression that the type of expense was not legitimate.

Posted by: Kelly | Sep 16, 2010 5:41:58 PM