Tax Court: Deduction of Flight Expenses
The IRS audited our client’s 2005 income tax returns. Our client was in the trade or business of installing machinery in hard to reach towns in the western United States. Our client utilized an airplane to reach his clients. He deducted the cost of his expenses associated with flying his airplane on his 2005 income tax returns. The IRS disallowed these expenses. The IRS attempted to assess an additional tax liability of $99,851 against our client. Our attorneys filed a petition with the United States Tax Court contesting the proposed assessment. Through negotiations, we convinced the IRS that in the event of trial, there is a substantial possibility that we may convince the court the IRS erroneously disallowed the deduction. The IRS took the hazards of litigation into consideration and offered a settlement of $16,456 to avoid trial. Our client accepted the settlement offer.
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