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CALIFORNIA COUPLE DENIED A BUSINESS DEDUCTION FOR THEIR RV

Posted by Admin Posted on Aug 28 2015

The Jacksons owned and operated an insurance company which sold auto and RV insurance in Copperopolis, California.  In 2004, they purchased a Winnebago RV, which they used to attend various RV rallies and events, gathering sales leads and using it as a meeting place for their potential clients to discuss insurance at the various RV related events.  The couple then deducted the cost and expense of the RV as a business expense.

Upon audit, the IRS denied those deductions as business deductions, as no portion of the RV was used exclusively for business.  The interest taxes paid with respect to the RV could be deducted as a second home, and the cost and maintenance of a second home is not allowed as a business expense deduction, even though the Jacksons had mileage logs and substantial documentation of their business use.

The tax court agreed with the IRS, and the Jacksons ended up with a $50,677 tax bill.