Jump directly to the content
A Caution for Church Volunteers Deducting Expenses
Recent Tax Court ruling addresses common expenses and charitable contributions.

After conducting a two-year audit of a church volunteer and consultant, the Internal Revenue Service concluded that the individual being audited had understated her income tax liability by $55,000. The taxpayer appealed to the United States Tax Court. In Barnes v. Commissioner, T.C.Memo, 2016-212, the Tax Court addressed a number of issues, including the proper substantiation of car expenses, internet expenses, supplies, and charitable contributions. The Court's treatment of these expenses is instructive and is summarized in this article.

Car expenses

Deductions for the business use of a car are subject to strict substantiation requirements described in section 274(d) of the tax code. Section 274(d) allows taxpayers to substantiate expenses incurred in the business use of a car either by tracking the actual expenses of using the car, or by multiplying business miles driven by a standard mileage rate set by the IRS.

If a taxpayer chooses to use the standard mileage rate, then he or she must be able to substantiate (1) the mileage of each business use and the total business and nonbusiness mileage during the taxable year, (2) the date of each business use of the vehicle, and (3) the "business purpose of each use" of the vehicle. All expenses must be substantiated using "adequate records or sufficient evidence corroborating the taxpayer's own statement."

To meet the "adequate records" requirements of section 274(d) for vehicle expenses, a taxpayer choosing the mileage-rate option must maintain:

Article Preview

This article is currently available to ChurchLawAndTax.com subscribers only. To continue reading:

Related Topics:
From Issue:
View All
from our store
Politics and the Church

Politics and the Church

Tax and legal guidelines faith-based organizations need to know before jumping into the political fray.
20 Finance Questions Churches Ask

20 Finance Questions Churches Ask

Richard Hammar shares his answers to 20 of the most widely asked and relevant tax and finance questions for church leaders.
Immigration & the Church

Immigration & the Church

Help with determining how to proceed legally with the issue of immigration
Protecting Your Tax-Exempt Status

Protecting Your Tax-Exempt Status

Understand the requirements of your tax-exempt status.

ChurchSalary

ChurchSalary

Experience a whole new way to set compensation. Eliminate the guesswork – get access to detailed compensation reports in just minutes.