Charley Long is a truck driver, the 18-wheeler variety. He is a member in a limited liability company, Fishy Co., a seafood company in Mobile, Alabama. Charleys job entails delivering fresh fish to restaurants and wholesale fish distributors in Mississippi and Louisiana.

Charleys routine varied. Sometimes, he drives straight back to Mobile from Lafayette. On other occasions, he parks at a truck stop and sleeps in his cab, which is equipped with a small, sparse sleeping accommodations, or spends the night in a motel along the road before returning to Mobile.

When Charley drives straight back to Mobile, Charley will eat one meal. When he sleeps overnight, he will eat two meals, a late dinner and breakfast.

During the current year, Charley incurred the following expenses:

Meals incurred on nonstop trips = $1,000

Meals incurred when slept in cab = $800

Meals incurred when slept in motel = $600

Lodging = $2,800

Total = $5,200

You are encouraged to use tax resources to help you determine which items are deductible. You are welcome to use these as support in your letter, as appropriate.

ISSUE: The IRS has disallowed all of the above expenses on the grounds that they are not bona fide travel expenses but personal expenses, meaning that Charlie owes taxes on the entire $5,200. Assume Charlie appropriately prepared a Form Schedule C with his personal tax return and included these expenses as part of his business. Prepare a response to the IRS of at least 400 words that indicates the amount of expenses deductible and the the amount of taxes owed, assuming Charlie is in the highest tax bracket.

The letter should include the following:

• Explanation of the taxpayers business and expenses
• Explanation of the IRS disallowance of the expenses
• Tax laws to support the deductions, where applicable
• Conclusion as to the amount of deductions allowed, where applicable

List of laws to incorporate into this are the following:

1. Sec. 162(a)(2) and Reg. Sec. 1.162-2(a)
2. U.S. v. Correll, 389 U.S. 299 (1967)
3. Williams v. Patterson, 286 F.2d 333 (5^th Cir. 1961)
4. Rev. Rul 75-168, 1975-1 C.B. 58 and Rev. Rul. 75-432, 1975-2 C.B. 60

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