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Aspen Office
400 East Main Street
Aspen, CO 81611

Carbondale Office
0326 Hwy 133, Suite 200
Carbondale, CO 81623



Document Your Tax Deductions!

The IRS is at it again. In late 2009 the IRS created a new enforcement unit called the Global High Wealth Industry Group. This group was designed to centralize the focus of IRS compliance and audit efforts involving high-wealth individuals and their related entities. One area this enforcement unit is targeting is proper documentation of business expenses. Types of deductions under scrutiny include travel, lodging and auto use, amongst others. So, let's quickly review the rules so that you do not end up on the wrong side of this issue.

What is required?

The IRS requires that any and all business expenses be properly documented with “adequate records” to support the expenses. Essentially, these “adequate records” must establish the time and business purpose for the expense.

But what are adequate records?

“Adequate records” consist of documentary evidence that will support each element of an expense. For each expense you must record certain information such as the amount, place, business purpose, and business relationship of others included in the expense, either in a log or on the receipt, canceled check or bill/invoice itself.

There are a couple of exceptions to the documentary evidence requirement to substantiate your expenses. If you incur meal and/or lodging expenses while traveling away from home for which you are reimbursed by your employer, you can use a per diem allowance method so no detailed documentation is required. The second exception is where your expense, excluding lodging, totals less than $75.

Please give us a call if you have any questions about these requirements or any other topic.




Reese Henry & Company, Inc.
400 East Main Street Aspen, CO 81611
970.925 3771

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