Foriest v. Comm’r, T.C. Summary Opinion 2009-110 (T.C. 2009).
Mr. Foriest is a firefighter and an alleged farmer (during 2003 he was also the owner of a lawn care business). The IRS disallowed, among other things, his unreimbursed employee business expense deductions (except the union dues), and his farming loss deductions on his 2003 and 2004 tax returns.
Unreimbursed Employee Business Expenses
In total, Mr. Foriest claimed a $4,024 deduction for unreimbursed employee business expenses on Form 2106, Employee Business Expenses. This amount included:
- $2,040 in contributions to a common meal fund for meals consumed at the firehouse.
- $1,514 in 2003 and $1,580 in 2004 for uniform cleaning and maintenance.
- $260 for incidental business expenses for both 2003 and 2004.
- $210 for union dues in 2003, and $510 for union dues in 2004
Section 162(a) allows a deduction for trade or business expenses that are ordinary and necessary. Section 6001 requires taxpayers to keep records that substantiate expenses were paid or incurred during the year they take the deduction. Section 262(a), however, disallows personal living expenses. Here, Mr. Foriest failed to adequately substantiate his incidental business expenses because he provided no documentation supporting the $260. Neither could Mr. Foriest provide documentation supporting more than $260 in union dues. Consequently, the Court reduced his deductions to an amount he could substantiate.
Meal Expenses are generally not deductible unless incurred while traveling on business away from home. see section 262(a). The Court points out, however, that where a firefighter is required as a condition of employment to contribute to a common meal fund, then those contributions qualify as deductible ordinary and necessary business expenses. But, if a firefighter voluntarily contributes, then the contribution is considered a non-deductible personal expense. Here, Mr. Foriest voluntarily contributed to the common meal fund, consequently his meal expenses are non-deductible personal expenses.
Uniforms are deductible if (1) required as condition of employment and (2) not adaptable for everyday use. While the Tax Court agrees that Mr. Foriest is required to wear a uniform as a condition of employment, he did not provide any documentation to substantiate his claimed expenses. Consequently, the Court reduces his uniform expense deductions to $500 for both 2003 and 2004.
Farming Losses
Finally, the Foriests reported a $24,116 net loss on Schedule F, Profit or Loss from Farming. The IRS disallows all their farming deductions because their farming activity did not rise to the level of a trade or business. As such, their deductions are limited by section 183, the hobby loss rules. One quote from the Tax Court says it all:
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