Documentation is critical when taking expenses on your business return or Schedule C. Make sure your receipts show the date, the amount, where the meeting took place, who was in attendance, and what business purpose was covered during the meeting. The IRS is disallowing expenses lacking this vital information. A receipt is not enough to substantiate your right to take the deduction.
Best practice: write everything on the receipt and then attach the receipt to your accounting software transaction. This way you have a copy of the receipt for future reference, not just your memory.
The IRS firmly holds to Title 26 US Code §274 (d) which states:
(d)Substantiation required: No deduction or credit shall be allowed—
(1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home),
(2) for any expense for gifts, or
(3) with respect to any listed property (as defined in section 280F(d)(4)),
unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel or the date and description of the gift, (C) the business purpose of the expense or other item, and (D) the business relationship to the taxpayer of the person receiving the benefit. The Secretary may by regulations provide that some or all of the requirements of the preceding sentence shall not apply in the case of an expense which does not exceed an amount prescribed pursuant to such regulations. This subsection shall not apply to any qualified nonpersonal use vehicle (as defined in subsection (i)).
In recent court cases, (Near v. Commissioner, Anna M. Armstrong v. Commissioner), receipts were not enough to substantiate a deduction. The judge was looking for proof of business purpose, which the defendants had not prepared. Judgement was upheld for the IRS with substantial monetary repercussions.
