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D. Unreimbursed Employee Expenses
Section 162(a) allows a taxpayer a deduction for ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on a trade or business, including a trade or business
as an employee, subject to the limitation that a taxpayer is
allowed a deduction for miscellaneous itemized deductions only to
the extent that they exceed 2 percent of his AGI. Furthermore, a
taxpayer is not allowed any deductions for personal, living, or
family expenses. Sec. 262.
1. Transportation and Travel Expenses
Section 162(a)(2) allows a taxpayer a deduction for
traveling expenses while away from home and in the pursuit of a
trade or business. However, section 274(d) requires strict
substantiation by adequate records or by sufficient evidence
corroborating the taxpayer’s statement for deductions otherwise
allowed under section 162 and for any expenses related to listed
property such as cars and trucks, travel, and meals and
entertainment expenses. Sec. 280F(d)(4)(A); sec. 1.274-5T(a),
Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985).
The substantiation must show the amount, time, place, and
business purpose of the expense. Sec. 1.274-5T(b)(2), (6), (c),
Temporary Income Tax Regs., 50 Fed. Reg. 46014-46017 (Nov. 6,
1985).
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Last modified: November 10, 2007