California—Personal Income Tax: Supplemental Documentation Did Not Substantiate Claimed Deduction Amounts.
Supplemental documentation provided by taxpayers regarding their claimed California personal income tax deductions for ordinary and necessary expenses paid or incurred in carrying on a trade or business was not sufficient to overcome the presumption that the Franchise Tax Board’s determinations, based on a federal audit report, were correct.
With regard to their claimed vehicle expenses, the taxpayers did not identify the source of the document they provided that showed a schedule of vehicle payments, and the document was not accompanied with underlying documentation verifying the information on it. With regard to their claimed office expenses, although a tenant ledger was provided that indicated payments for rent and utilities, nothing in that document showed that those amounts were not included in the office expenses already allowed as a deduction. With regard to their claimed education expenses, an unofficial university transcript, which did not contain the taxpayer-husband’s name or other identifying information, and did not include any information regarding amounts paid for the course work described on the transcript, was not sufficient documentation to substantiate the deduction. Finally, with regard to their claimed travel expenses and meals or entertainment expenses, the taxpayers did not provide any additional documentation or legal argument to support those claimed deductions, so they did not establish that they were entitled to those deductions.
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