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OUR VENDORS ALL ROUND THEIR BILLS TO THE NEAREST $50

February 28, 2008

Why might the IRS have been suspicious of this deduction list for a rental property:

  - Advertising $350
  - Auto and travel 4,500
  - Cleaning and maintenance 3,000
  - Repairs 12,000
  - Supplies 900
  - Utilities 3,000

Not surprisingly, the client didn't exactly have records showing these precise amounts. Russ Fox sums it up:

[The taxpayers] invented numbers out of thin air and got the results they deserved. If you have rental property, you're supposed to treat it as a business. You can purchase a filing cabinet for under $100.

The moral: keep your receipts, and only take expenses you actually incur.

Cite: Burkley, T.C. Summary Opinion 2008-20.

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