Tax Court Denies RV Business Deductions

rgatijnet1 wrote:
When it comes to business tax deductions....just don't get greedy. IN this case, the person tried to deduct more than he paid for the coach and his gross receipts seemed to indicate that the possibility of making a profit were slim to none. You don't spend a quarter million on an RV with the hopes of getting back $14K in insurance sales.
Obviously people start a business with some expectation of making a profit, but in this case the amount earned was so far away from the expenses claimed that I am sure that the courts saw this for what it was.

Sounds like it was not legitimate.

I think the best Sec. 280A argument is to have less than 14 days of personal use, especially the first year when you take the expensing deduction. You will need to show that business use is similar to travel expenses in a hotel, and the fact that you are living in the motorhome is no more personal use than the benefits of a hotel.

When it comes to business tax deductions....just don't get greedy. IN this case, the person tried to deduct more than he paid for the coach and his gross receipts seemed to indicate that the possibility of making a profit were slim to none. You don't spend a quarter million on an RV with the hopes of getting back $14K in insurance sales.
Obviously people start a business with some expectation of making a profit, but in this case the amount earned was so far away from the expenses claimed that I am sure that the courts saw this for what it was.

Even though 25% of the square footage in my previous home was for my insurance office I did not deduct it because I knew I was going to make a huge profit when I sold the house and that would have made it a taxable gain. $15,900 in 1976 vs $180,000 in 2001. If we hadn't been in a recession it would have been a lot more.

IF you READ the OP's post...he didn't say it applied across the board, he simply suggested you SHARE it with YOUR CPA if you're taking the deduction.......:W.....Dennis

id be happy with 66% write off.

The taxpayers’ problems – like many tax cases, the taxpayers caused a major part of their problems.

1. Depreciation – based upon $302,119 while they paid $248,456.96 and did not justify the higher number.
2. Business use in 2006 – claimed 100% without records. Admitted at trial that there was some personal use.
3. Business use in 2007 – claimed 99.95%. There were records, but the Tax Court determined that the actual business use was 66.7%.

If the IRS or Tax Court catches you making false statements (or even unsupported claims), you are in trouble. Their attorney claimed that Sec. 280A was not applicable, but when you are in the wrong the Tax Court may insist on a “letter of the law” interpretation.

If anyone has a good argument on the Sec. 280A issue, that would be helpful to RV.net readers.

old guy wrote:
so does that mean the country singers can't deduct their fuel and other costs when touring America??

No.

so does that mean the country singers can't deduct their fuel and other costs when touring America??

Simplified office rules make this kind of moot. You can take reasonable space allowance per the new (last year) Sched C rules. Always leave a little on the table...makes the audit easier and usually in your favor. JMHO