Jozsef and Zsuzsanna Balla - Page 7




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                    68 Days x  $87 Sat. Croix, Virgin Islands=  5,916.                 
                    40 Days x  $75 Aguirre <San Juan>, Puerto Rico  =  3,000.         
                    25 Days x  $75 Guayama <San Juan>, Puerto Rico  =  1,875.         
                    21 Days x  $75 Arecibo <San Juan>, Puerto Rico  =  1,575.         
                    30 Days x  $42 Kingston, New York       =  1,260.                 
                    19 Days x  $50 New York City <Manhattan>, NY=    950.                 
                    12 Days x  $66 Puerto Plata, Dominican Rep.=    792                  
                    14 Days x  $46 New Orleans, Louisiana   =    644.                 
                    7 Days x  $75 Mayaguez <San Juan>, Puerto Rico =    525.          
                    6 Days x  $75 San Juan, Puerto Rico     =    450.                 
                    5 Days x  $50 Brooklyn, New York        =    250.                 
                    3 Days x  $75 Yabucoa <San Juan>, Puerto Rico  =    225.          
                    2 Days x  $38 Delaware City <Wilmington>, DE=     76.                 
                                                            -------                   
               Total Sailor Travel Costs Allowed per OCONUS & CONUS Rates    17,538.  
               LESS EMPLOYER PROVIDED REIMBURSEMENTS        <2,772>                   
                                                            -------                   
               Sailor Travel Allowance in Excess of Reimbursements14,766.                   
               As a MERCHANT SAILOR, taxpayer was required by his employer to         
               travel to various locations to meet his ships.  Per IRS Rev Rul        
               99-7 and attached Marin Johnson Tax Court Decision, his auto           
               mileage and possibly other travel-related costs are FULLY              
               DEDUCTIBLE as follows:                                                 
                    12 Days x  $42 Tampa, Florida           =    504.                 
                         Rental Cars & Other Travel Related Costs  =    903.          
                                                            -------                   
               Total U.S. Tax Court & Other Sailor Travel Expenses Allowed   16,173.  
                                                            =======                   
          Petitioners concede that they are not entitled to any mileage or            
          rental car expense deductions claimed for 2003.  Petitioners have           
          not provided any receipts, other documentation, or explanations             
          to substantiate the amounts or business purposes, if applicable,            
          of the expenses claimed for tax preparation fees and “Sailor                
          Req’d Phone/Pager” for 2003.                                                
                                       OPINION                                        
               Section 162 permits taxpayers to deduct all ordinary and               
          necessary business expenses paid or incurred during the taxable             
          year and specifically includes traveling expenses (including                
          amounts expended for meals and lodging other than amounts that              
          are lavish or extravagant under the circumstances) while away               





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