This case is directly on point for at least three discussions.........one in Cafe about partnership returns, one in cafe about LLC vs Ltd, and one in Machinery about varmint rifles.

The following case just came to me from Commerce Clearing House.  It is a Tax Court case directly on point for what is GOING to start happening frequently when IRS audits and determines that someone has just not followed the rules-------- regardless of the reason.

Not following the rules would include such things as not filing partnership returns where one is required UNDER THE LAW, not keeping documentation for listed property, etc etc.

Note that this case involves an automobile and unsubstantiated miles........how many of you tell the tax preparer to just take off x number of miles for business use of your wife's car for running after parts??

Especially note also the Court's statement concerning obtaining "competent advice".  "The taxpayer did not seek competent tax advice or otherwise make a reasonable attempt to comply with the recordkeeping requirements related to his expenses."

Be forewarned.......IRS is NOT getting friendlier........and add the Obamacare tax provisions and IRS's mandate for applying compliance with the healthcare laws, it is going to get really interesting.

******************************************************************
Federal Tax Day - Current,J.1,Professor’s Unreimbursed Employee Business Expenses Not Substantiated; Penalties Imposed (Posluns, TCM),(Dec. 4, 2012)

An associate professor did not adequately substantiate vehicle, travel, and other unreimbursed employee business expenses he claimed on Schedule C. Summaries of a log that he had prepared for trial did not constitute substantiation of the items listed in the log. His general assertions that he incurred and substantiated the expenditures were no more persuasive than assertions that his amended return was correct as filed. In addition, he was liable for the Code Sec. 6662(a) penalty for underpayment of federal income tax attributable to negligence or disregard of rules or regulations. The taxpayer did not seek competent tax advice or otherwise make a reasonable attempt to comply with the recordkeeping requirements related to his expenses. He simply insisted that he substantiated his deductions and that the IRS unreasonably disallowed them. This, he did not have reasonable cause under Code Sec. 6664(c) to avoid the penalty.

J.R. Posluns, TC Memo. 2012-332, Dec. 59,272(M)