Wackiest Tax Write-Offs
Previous-
Tales of Creative Filers
Some tax deductions are questionable. Others are illegal. And then there are those that are just plain weird.
Every year, Bankrate catalogues the 10 craziest new write-off tales CPA's have heard. Past years have featured everything from sperm donations to tricked-out Amish buggies
See the creative and sometimes audacious ways your fellow taxpayers have tried to save on their returns.
First: Up in Smoke -
Up In Smoke
Business deductions are always tricky, but what if you're running an illegal business? One marijuana dealer tried to deduct his crop as an expense, only to find that for criminal enterprises, the tax laws get very simple. No deductions. Period.
Next: A Family Affair -
A Family Affair
Parents have asked one accountant more than once if they can claim a bad-debt loss from loans made to their children that were never repaid (quite possibly the majority of such loans!)
Without documenation verifying the loan exists, and records that you have taken legal action attempting to collect, such a deduction if invalid. The moral? Loan out of love, not for the tax benefits.
Next: Inflating Your Assets -
Silence Is Golden
But is it deductible? For one man that bought his chronically noisy neighbor's home and moved the house away to donate it to a local woman's shelter, the answer is 'yes.'
While such deductions are limited to a percentage of one's income, the IRS doesn't care why you donated to charity, only that the donation was made and recorded properly.
Next: Big Apple, Big Deduction? -
Big Apple, Big Deduction?
By this point, it may come as no surprise that computers make mistakes, too. In once instance, tax software mistook a filer's return address of 'New York, NY' for the name of a dependent and claimed it as such.
Apparently, the IRS' computers weren't terribly swift, either, as the fact that one person appeared to be taking a major metropolitan area as a deduction went unnoticed until much, much later.
Next: Risky Business -
Risky Business
When does a business expense exceed IRS criteria? One man attempted to convince his CPA that a call girl hired to entertain some clients qualified. When the CPA said the businessman would need to present this 'independent contractor' with a Form 1099, he thought better of it and dropped the whole idea.
Next: The 'Zoolander' Deduction -
The 'Zoolander' Deduction
What if your body is your business? Models can deduct a lot of their makeup and some clothing, but it has to fit the rules.
CPAs have seen the beautiful people come up with some twisted logic to attempt to justify manicures, pedicures and back waxing. Some parents even tried to deduct money given to infants for 'modeling' for their parents. No joke.
Next: On the Road ... Again -
On the Road ... Again?
Even some long-haul truckers may have raised eyebrows when one salesman attempted to tell his accountant he drove 60,000 miles in one year, all of it for business. The accountant had to ask if he had any time for sleep (let alone business meetings), as it would have meant that the man was spending most of every business day just driving from place to place.
Next: It's a Business Meeting ... Not -
It's a Business Meeting ... Not
When a man with $300,000 of gross income lists $50,000 dollars for 'business entertainment expenses' on his return, you can bet there's a story behind it.
A little digging by his accountant discovered that the man was attempting to deduct his daughter's wedding. He justified the deduction by inviting his clients to attend.
Next: Pennies From Heaven -
Pennies From Heaven
If you attend church, you may feel inclined to donate a few dollars into the collection plate 'as the spirit moves you.' But as one accountant advised his client, if you intend to try to deduct these contributions, make sure the spirit moves you to bring your checkbook so you have the cancelled check as a record. That way both the spirit and the IRS will be satisfied.
Next: Silence Is Golden -
Inflating Your Assets
An almost-mythic deduction told in CPA classes turns out to be absolutely true.
Apparently, a topless dancer got breast implants, treated them as 'capital assets' and deducted them and an ordinary business expense.
The surprise ending? When the IRS took her to tax court, she won.
Next: More From AOL -
More on AOL:
Dirty Dozen Tax Scams
The IRS recently unveiled the 12 most common tax schemes and scams affecting American taxpayers in 2008.
This year's list is highlighted by Internet phishing scams and several new frivolous tax arguments.
Click through our gallery to see the schemes that the IRS urges taxpayers to avoid.
See the Dirty DozenMore in Money & Finance:
Recent Comments
Ridgerunner72160 07:20:49 PM Jun 10 2008
Wrjatalley......The American Civil War wasn't about slavery at all. All that crap you read in the history books about the evil Confederacy and those nice yankees is just that......total crappola. Lincoln was a corporate railroad lawyer and the war was REALLY about taxing the agricultural South. How much do you want to bet that the descendants of all those "oh so great yankees" are the same ones pushing for free trade and sending all manufacturing to Asia where they can get free Chinaboy labor!!!!!!!
Scottv518 05:37:00 PM Jun 05 2008
Regardless of what it is called, rebate or whatever it is still a redistribution of working class peoples hard money!
Scottv
Fortpilewsky 08:09:31 AM Apr 10 2008
WHEN DO WE GET PAID FOR OUR EFORTS TO GET COUNTRIES BACK,HELPING THEM AND THEN THEY NOT ONLY FORGE TO PAY US BACK BUT THEY ROB US OF EVERY CENT WE HAVE TO BUY THER OIL.
LONG SENTANCE,BUT I HAD TO GET IT OUT IN ONE BREATH.
IF THEY KEEP ROBBING US WITH HIGH OIL PRICES IT MIGHT BE MY LAST.
TAKE OFF ALL US TAXES ON OIL AND CHARGE THE LOSS OF THOES TAXES TO THE INPORTERS OF THERE HIGH PRICED OIL.
THEY CAN AFFORD IT AND THEY OWE US PLENTY.
MargarB5 03:26:21 PM Apr 09 2008
They make you report all the interest you recieve yet you cannot deduct the interest you pay except on your home. Auto interest used to be deductible and is only fair that it now be deductible.
Ritchiebalm 11:44:25 AM Apr 09 2008
I have 2 dogs and 2 cats, they are my kids, why can't I deduct them? their food is not cheap.
Vincej127 10:34:32 PM Apr 06 2008
wake up america , we signed yalta conf .and potsdam with red china ,britain , france, and russia thats the big 5 with veto power.........in UN and red china was visited by Nixon etc. ....................un fight in korea was first war where our ex enemies were allowed to contribute . god bless bob hope and the uso shows ....when will our youth learn history again .....go for it J.leno amen
Wrjatalley 06:45:15 PM Apr 06 2008
So cry your RP river about how TAXES are driving jobs out of the US somewhere else.
How about taking it to China with the jobs.
Wrjatalley 06:43:29 PM Apr 06 2008
Why will no american companies bring back jobs to america?
Its not the taxes.
Its the free slaves they get in China, India, Singapore.
True Yankee Hypocricy. Fire americans and buy a chinaboy. THey cheap.
So WHAT was the American Civil War about?
NOT SLAVERY.
Anth391384 12:32:22 PM Apr 06 2008
My car got broken into and about $300-$400 stolen Christmas Eve 2005. I had just cashed a paycheck at the bank and the criminal could have followed my car from the bank to a shopping center. I couldn't write off the money stolen or the cost of replacing the broken window as a loss, even with a Cincinnati Police report.
