Okay, it is almost the filing due date and I am getting a little punchy. I’ve been collecting ridiculous tax deductions lately. I offer my special thanks to Accounting Today and the Minnesota Society of CPAs, from whom I borrowed much of my material below. Few, if any, of these occurred in my own practice. That’s my story and I am sticking to it. Here are my top ten.
- A 78-year old retired tax lawyer claimed as medical expenses about $300,000 spent on prostitutes and pornography. He had no shame. He took the case to the Federal Tax Court and the New York State Appeals Court. He lost.
- One accountant had a client who arranged a bride from Russia and wanted to write off the dowry he needed to pay to her family and the phone calls to arrange the transaction. I’m not quite sure what kind of deduction he was trying to manufacture – maybe a casualty loss?
- A business owner wanted to include his new speed boat as a company expense, claiming it was an employee benefit for helping the employees deal with job stress. The company was in Los Angeles. The boat was on Lake Havasu, Ariz. Maybe the employees chilled out as they drove across Nevada.
- A taxpayer argued that a spouse’s drug habit was a medical expense.
- Pets are popular with taxpayers wanting to deduct everything from pet food to vet bills.
- A client added his children’s school fees as training expenses to be absorbed by the company he runs.
- A handyman proposed to take a $25,000 mileage deduction, even though he had only $10,000 in revenue. He justified it by saying he drove 50,000 business miles in one year.
- An over-the-road truck driver wanted to deduct as entertainment expense the cost of female companionship while traveling.
- A doctor wanted to deduct his hair styling costs, including hair dye, as a business expense.
- Another taxpayer wanted to claim as a charitable contribution the market value of whole blood that the taxpayer donated. There was actually a Tax Court case about this one.
That is about the best I can do in this sleep-deprived condition. I’ll be more cerebral after April 17.