- quote -

You can ask for some type of receipt in almost all types of
business-related cash transactions. I use a local mailing &
copy center and for some types of services they only give me
a cash register receipt with no information about the item
purchased. In that case I add a note to the receipt that
documents what I purchased. Yes, I know that I added this
note, but I believe the receipt and note are better than no
receipt at all.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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Dan Lanciani wrote:
- quote -

One way or another, you must be able to document that (a)
the expenditure was for a deductible item and (b) you paid
it, i.e., it wasn't paid for by somebody else.

Cash register receipts don't generally identify the
customer. As a state income tax auditor (many years ago), I
wouldn't have disallowed an otherwise legitimate-appearing
expenditure just because it was documented only by a cash
register receipt. However, if there were a LOT of such
expenditures, and the situation was such as to suggest the
possibility that someone other than the taxpayer might have
paid them, I might have been more skeptical.

Katie in San Diego

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katiej_1958[at]yahoo.com (Katie) writes:

- quote -

What (if anything) do you need in addition to a receipt to
sustain a deduction on audit? (Assume that the character of
the deduction is not in question, i.e., it is an ordinary
and necessary expense for your business.) Does it make a
difference whether the receipt identifies you as the payer
in some way?

Dan Lanciani
ddl[at]danlan.*com

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<veg_all[at]yahoo.com> wrote:

- quote -

While your answer is correct, your reasoning is WRONG! You
can't use the "audit lottery" argument to support a
deduction. To do so would mean that you could claim all
sorts of things on your return that you aren't entitled to.

You can however claim deductions for the items you spent and
you can rely on other methods to support those deductions.
Whether those items will be sustained or challenged by the
IRS under examination is not particularly relevant at this
point. If you spent the money on a legitimate item and you
have empirical evidence to support the disbursement then you
are within your rights to claim the deduction.

Gene E. Utterback, EA, RFC

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veg_all[at]yahoo.com wrote:

- quote -

In some situations transactions are entirely cash and no
receipts.

In my case I'll continue to claim the fees I pay at the
farmer's market where I have a stand without receipt
together with accounting for the cash purchases from
customers for which there are also no receipts. As I
usually come out ahead, if I'd drop the deduction I'd
probably be tempted to also drop the income ... (all cash,
no records other than the ones I keep by hand).

Maren
Palms, Etc.: Tropical Plant Seeds - Hand-made Jewelry - Plants &
Lilikoi
http://www.jach.hawaii.edu/~maren/palms_etc/

Moderator:
Contemporaneous recordkeeping ~may~ be acceptable in lieu
of receipts for someone in a cash business.

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So if you don't have the receipts should you still claim the
deduction? I would say yes since one is not audited every
year for every deduction.

What you may have to owe tax for during one audit is more
than made up for previous years when you claimed similar
deductions with no receipts. Plus as was mentioned, the
auditor should work for you as long as you are doing
everything honesetly and have mostly good records for other
deductions.

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jwilder987[at]yahoo.com wrote:

- quote -

You need to keep all of your business cash register
receipts. Valid proof of an allowable deduction includes a
description of the item or items purchased. Your bank
statement doesn't show that. Only the cash register receipt
provides the required detail.

With respect to the bills paid via your bank's online
service, you must retain the invoice or other document. If
you received the billing electronically, print out a hard
copy for your file. The bank's records will show only the
payee and the amount, not what the charge was for.

It is particularly important to maintain such records in a
closely-held business, such as a single-member LLC. You can
imagine how some taxpayers might take advantage of a more
liberal IRS approach by paying personal expenses through the
business account.

Katie in San Diego

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<jwilder987[at]yahoo.com> wrote:

- quote -

Pretty much - in order to win in audit you need to provide
sufficient evidence to support that the money you spent was
spent on a deductible item. The amounts shown on your bank
statement show the dollar amount and the location of the
disbursement but the do NOT show any detail supporting WHAT
you spent the money on. The detail of WHAT was bought is
located on the sales receipt, that is why you should keep
those.

Now, from a practical perspective - if you are missing one
or two receipts for small dollar amounts and your records
otherwise support your contention, then most auditors will
work with you. However, if you are missing the majority of
your receipts then you have a problem.

Keep those receipts,
Gene E. Utterback, EA, RFC

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<jwilder987[at]yahoo.com> wrote

- quote -

She's pretty much correct. The check (or charge item) is
only proof that something was paid. It doesn't show (or
misrepresents) what was actually purchased, which generally
is on the receipt.

Take a charge to my BP card, it could be for fuel, or some
snacks or beer from the shop, or vehicle repairs, or......

Same hold true for almost every expense item you have. The
receipt (actual paper ticket) is far more valuable than
proof of payment.

Now, if you are missing a few (a very few) receipts, and it
is obvious that the vendor is a business supplier, and the
amount is consistent with past and future expenses from that
same supplier, and there isn't any other monkey business
within your books, the auditor will let it slide.

But, if your regular power bill (and payment) runs $400 a
month on average, and then there appears a check to the
power company for $8000, they aren't going to be lieve that
it was a power bill being paid. It could have been a used
truck they tend to auction off every now and again. How are
they going to know without the receipts.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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wilder987[at]yahoo.com wrote:

- quote -

A credit card statement is not a valid receipt, you need the
actual charge slip and/or an invoice or cash register slip.
A bank statement, also, is not acceptable to IRS -- the
checks shown could be for anything.

A copy of a check or the returned (paid) check may or may
not be acceptable. If the check is made payable and
endorsed for deposit by a business that only provides one
product or service, it may be acceptable. If the check is
made payable to a large store, it is not acceptable. If you
go to WalMart, for example, you could be buying office
supplies -- or you could be buying clothes for the kids --
the check itself is not proof of WHAT you paid for.

Generally, it is much safer to keep invoices or receipts
which show what you are paying for and, if necessary, a
notation of the business purpose.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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My husband and I run a business which is set up as a single
member LLC. We use our online banking to pay bills (where
the bank sends a cashier check) and have a business debit
card. When we buy things with the debit card for the
business sometimes we don't keep the cash register receipt.
The card is used solely for the business expenses.

In a tax discussion today, a lady told me that the IRS does
not consider bank statements (showing cleared checks) and
debit card withdraws at POSs on the bank statement, or
copies of canceled checks as valid receipts. She said they
only count cash register receipts and paper invoices from
vendors as valid.

Is this true? What constitutes proof of a valid deduction???

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