| Then there was my boss' client back in 1981 whose diary showed him taking his customers to Phillies and 76ers games, back when the cost of two tickets was less than $25. The diary also showed drinks at a club before the game, for less than $25, and a snack after for less than $25. Very few receipts. I was delegated to handle an audit; client kept postponing it until IRS said 'this is your last chance' so he met me in the IRS cafeteria at 8am and gave me the documents for some of the areas, and this Dome Accounting diary with the entertainment and driving miles all mixed together. I had ten minutes before the audit to look at his information, while he talked at me, telling me how clever he was. He left to sell computers. Had I been smart, I would have left also.
IRS disallowed entertainment, saying his employer should have teimbursed it despite employer letter that said entertainment after business hours was at the discretion of the employee and would not be reimbursed. We went to Appeals and they agreed with auditor. We filed petition for Tax Court and I met with District Counsel. We reached agreement that about 20% of the entertainment were lunches and reimburseable. Then she said, 'we have had this copy of the diary for six years now and no one has really looked at it. He doesn't have many receipts and seems to use our rules to his advantage.' She said she wanted to review the document.
When I got back to my office, I pulled out the original and it hit me: 1981 was the year of the long baseball strike, but in the diary the client kept attending games. Took it to my boss, since he was the attorney. Before he could reach District Counsel, they were back with a modified response charging civil fraud and a 50 or 75% penalty [rules were different then]. Client wanted to fight, saying he did spend money, just not that money, and from people who knew him, I knew he had the reputation as the last of the big time spenders. He was the company's top saleman. Boss explained to him that court would feel if he lied once, how did they know this would be the truth. I think he thought the judge would be a prospective customer and that he could sell him anything. Boss told him to take his medicine and learn his lesson.
So Michael, make sure your diary shows that the Chargers were playing!!!!!
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