Internet Service Payments Were Deductible Business Expenses

Posted by Kim Chen on March 10th, 2015

Internet Service Payments Were Deductible Business Expenses: A self-employed financial adviser paid a utility company a monthly fee that included telephone service, Internet service, and cable television for his residence. On his Schedule C for the year at issue, the taxpayer deducted $1,371 in business expenses for those charges, which the IRS disallowed as a nondeductible personal expense. Because Internet access expenses are utility expenses, strict substantiation does not apply, and an estimate of the deductible expenses can be made, based on reasonable evidence. The taxpayer maintained that he used the Internet service about 75% of the time for business purpose (e.g., to send and receive emails) and should be able to deduct a portion of the total charge. The Tax Court agreed, allowing the taxpayer to deduct $477, which was 75% of the amount he paid for Internet services. James E. Kaminski, TC Summ. Op. 2015-7 (Tax Ct.).

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