You cannot deduct personal household costs as business expenses, and calling informal caregiving a “business” without a profit motive or records will not survive IRS scrutiny.
Holding
The Tax Court disallowed all Schedule C deductions for 2020 and 2021, sustained an unreported IRA distribution for 2021, and upheld §6662(a) accuracy-related penalties in full.
Why It Matters
The court treated informal caregiving with no fixed compensation and minimal receipts as a non-business activity.
Failure to maintain separate accounts and contemporaneous records was decisive.
The court refused to apply the Cohan rule where expenses were unsubstantiated and included listed property subject to §274(d).
Accuracy-related penalties were sustained based on both substantial understatement and negligence.
This is a routine application of settled law. The case reinforces basic compliance standards rather than expanding doctrine.
Key Facts
Tracey Yvonne Lucas worked for the Social Security Administration and reported…
