Monday, April 18 is tax day 2011, and some Americans will attempt to slip some very creative tax deductions by the IRS. From flattop haircuts to human sperm donations, auditors have seen it all. In the spirit of the occasion and prefaced with the warning not to try this at home, here are some of the craziest tax deductions enterprising U.S. taxpayers have attempted.
Holy travel and entertainment deductions, Batman!
Dallas CPA Ken Sibley told Bankrate of one client – a minister – who attempted to claim travel and entertainment expenses as tax deductions. Apparently, the minister was looking for real estate investment properties but never found his promised land after years of trying. Hence, it could not qualify as a business expense.
He was charitable enough to marry her
Deducting wedding expenses is a no-no, even under the category of business travel and entertainment expenses. Just because you invite business clients doesn’t make the wedding a business expense, a Massachusetts CPA said. And remember: your betrothed is not a charity, so you can’t count wedding expenses as charitable donations, either.
That’s a 30-year plan
New Jersey CPA Don Meyer spoke of the business manager of a famous entertainer who arranged for the purchase of a $2 million office building. The idea was that it would be deductible as a business expense, and the business manager was expecting to deduct the entire expense in the same tax year. Unfortunately, Meyer had to tell the business manager that it would take more than 30 years to recover the complete expense. Even a suitcase full of money and an ominous admonition to “make it work” couldn’t change the tax law.
Securing a lifetime of tax money
A home-based business can produce legitimate tax deductions, but claiming pets as security expenses won’t fly. Home security systems in general don’t fly with the IRS, either, says the Hunter Group of Fair Lawn, N.J. One client tried to declare a security system under the rationale that if her home was invaded and she was slain, she’d no longer be able to pay taxes.
Dues and subscriptions for professional and trade publications may be listed as tax deductions, so long as you are a professional in an approved field. The deduction would fall under miscellaneous deductions if it meets the 2 percent floor rule (2 percent or more of total adjusted gross income), writes Quizlaw.
However, if you’re a self-employed real estate professional who is attempting to write off adult magazines under the dues and subscriptions deduction rule, take a long, hard look in the mirror and reconsider, says another Massachusetts CPA.
On a related note, Don Meyer once had a client who happened to be a prostitute. She wanted to declare her income, and listed “public relations” as her job.