Two More Slow Learners

Henry and Patricia Langer are slow learners. They have just lost their case in the United States Tax Court because they failed to substantiate the deductions claimed on their 2001 tax return.

The Internal Revenue Code is notoriously complex, convoluted and confusing. But one key rule in taxation is that the taxpayer must substantiate all claimed deductions. This can be done in various ways. For example, a contemporaneous automotive mileage log can substantiate deductible business miles driven. Accordingly, I maintain a mileage log, with the odometer readings at the various points of my daily itinerary. The log is consistent with my appointment calendar, and also with the gasoline purchase log, and also with the mileage readings when my car is serviced (which are noted by the automobile dealer, a disinterested third party).

The totality of Henry and Patricia's substantiation of items such as entertainment expenses, gifts for Patricia's piano students, business meals and travel was their own self-serving testimony, without any back-up documentation such as mileage logs, et cetera. And much of Henry's oral testimony only dug him in deeper. One of the claimed expenses was "A crystal vase costing $2,635 purchased to cheer Mr. Langer up after the events of September 11, 2001" because he likes fresh cut flowers. Folks, you don't have to spend $100 a seat to see Jackie Mason on Broadway; the comedy is almost as good in the Tax Court, which you can go in and watch for free.

But before you start waxing too empathetic for Henry and Patricia and their misunderstanding of the requirements of the Internal Revenue Code, note that this wasn't their first time in court to dispute their taxes. Patricia's business taxes for 1993 and 1994 were in the U.S. District Court for the District of Minnesota. In 1992, Henry and Patricia had an earlier Tax Court dispute over their 1984, 1985 and 1986 tax returns, in which they also failed to provide substantiation for their verbal assertions. Their 1983 income tax return was the subject of an even earlier Tax Court dispute in 1990, again with unsubstantiated testimony. One would think that by the time they did their 2001 tax return, Henry and Patricia would have learned to keep records.

And if you still feel sorry for Henry and Patricia, and their cluelessness as to the need to keep business records, consider that until at least May 1990, Henry was employed as an IRS Agent.

The best that can be said about the Langers is that they are model slow learners.