The year is winding down. You're trying to gather of all your receipts. (Yeah, I know, next year you'll institute that record-keeping system). But some paperwork is missing.
What can you do?
You might want to check out a 79-year-old rule regarding the estimation of tax deductions.
In 1930, a federal court ruled that a famous actor, playwright and producer could deduct entertainment expenses based on estimated expenses, rather than having to produce detailed records of each expenditure. The holding in this case became known as the Cohan Rule.
Yep, Cohan as in George M. As in the man most of us think looked like Jimmy Cagney, since the actor portrayed the multi-talented artist in the movie Yankee Doodle Dandy. (Yes, Cagney started out not as a gangster, but a song and dance man himself.)
But as The Wandering Tax Pro, known to his friends as Robert D Flach, tells us in I'm a Yankee Doodle Tax Pro, the vaudevillian's name also has a lauded place in tax law.
Robert provides a nice examination of not only Cohan's entertainment background, but the Cohan Rule.
And being a tax pro with taxpayers' best interests in mind, RDF also offers these wise words when it come to write-offs:
Despite the fact that [the Cohan rule] "out" exists, you should not use it as an excuse not to keep good contemporaneous records and maintain detailed documentation of all your business expenses.
When you have the proper paper to back up your tax claims, you'll be doing a tax dance as happy as the one Cagney and Judy Garland performed in the Cohan-themed movie.
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