Re: The 9 weirdest tax write-offs

From: Robert Morien (PhD_failure_at_nousefulinfo.com)
Date: 03/04/05 

Date: Thu, 03 Mar 2005 21:46:09 -0800

In article <8s7f21dl0u2l5atchgr4eqhmfm1mgodl31@4ax.com>,
 Joel M. Eichen <joeleichen@yahoo.com> wrote:

> Good one Robert ... Are dentures tax deductible?
>
> Joel

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>
> On Thu, 03 Mar 2005 15:09:45 -0800, Robert Morien
> <PhD_failure@nousefulinfo.com> wrote:
>
> >
> >
> >The IRS offers no points for originality, but you can't blame
> >taxpayers for trying. They're writing off criminal acts, their pets
> >and even their televisions.
> >
> >
> >Did you hear the one about the ostrich? The sperm donor? The dog food?
> >
> >They're just three of the more ingenious tax deductions that creative
> >Americans have devised over the years to counterpunch the tax
> >collector. A quick Ali shuffle, a feint with the left and an
> >outlandish deduction delivered with a straight face can take the sting
> >out of the annual tax beating -- at least until the Internal Revenue
> >Service catches on.
> >
> >Taxes, of course, are no laughing matter. Serious consequences await
> >those who fail to file, falsely file, knowingly underreport or
> >otherwise throw spitballs at the system. Just ask Willie Nelson, who
> >lost the best little golf course in Texas to back taxes.Simplify your
> >taxes and get your refund faster.
> >
> >
> >File online.
> >
> >Still, every year Americans try to shave what they owe on their
> >personal income tax returns by pushing the envelope and letting their
> >certified public accountant make the line calls.
> >
> >"If you're going to be aggressive, deductions are where you're going
> >to do it. You're not going to do it in the area of income; you want to
> >report all your income," says Frank Howard, CPA and principal of
> >Howard and Waltrip in Dallas. "I go ahead and apply the smell test.
> >Most of the time, they're just throwing everything up against the wall
> >to see if it sticks."
> >
> >
> >Old argument invalidated
> >
> >As any accountant will tell you, the rewards of cheating on your taxes
> >are never worth the risk. And even if you find a tax pro willing to
> >push the limits, the Treasury Department says when it comes to
> >"potentially abusive" tax moves, the old "my tax adviser said it was
> >OK" argument will no longer work.
> >
> >"We are raising the stakes for taxpayers who fail to disclose
> >potentially abusive transactions to the IRS," stated Treasury
> >Assistant Secretary for Tax Policy Pam Olson in announcing the tougher
> >rule on Dec. 30, 2002. "Too many tax advisers have counseled clients
> >against disclosing their transactions with the expectation that the
> >advisers' opinions will allow the clients to avoid penalties."
> >
> >By removing that argument, tax officials now believe taxpayers'
> >risk-to-reward calculations will be more judicious, eliminating what
> >Olson describes as "inappropriate tax avoidance transactions."
> >
> >Still, it's a good bet that as April 15 approaches, many taxpayers
> >will do -- or at least try -- the darndest things. Here are nine of
> >the funniest, though not recommended, tax-trimming attempts that
> >clients have taken to CPAs across the country.
> >
> >
> >
> >My son, my dog
> >
> >Disc jockeys typically don't make much money and save even less. A few
> >years ago, one approached Wyoming CPA Mike Lovelett for some free
> >advice.
> >
> >"I've got this problem, and I'm really starting to get nervous about
> >it," the DJ admitted. "Several years ago, I was going to owe some tax,
> >so I put an extra deduction on my tax return."
> >
> >Well, reasoned Lovelett, managing director of Lovelett, Skogen &
> >Assoc. in Casper, it couldn't be that bad. Then the DJ explained: "I
> >put my dog on as a dependent." The radio personality had deducted his
> >dog Red all these years, a move that meant he owed nothing to the IRS.
> >
> >
> >
> >Sex and the city
> >
> >Then there was the client who approached Manhattan CPA Marc Albaum
> >about a very personal tax matter. "He had made some money being a
> >sperm donor and wanted to know if he could take a depletion
> >allowance," Albaum recalls. "I told him he really needed to be an oil
> >well or something like that."
> >
> >
> >Playing with fire
> >
> >Herb Wakeford, a CPA in Raleigh, N.C., recalls a Pittsburgh
> >furniture-store owner who, after years of trying unsuccessfully to
> >sell his business, hired an arsonist to torch the place. The insurance
> >company paid off to the tune of $500,000, which the owner dutifully
> >reported on his income tax return. However, along with taking the
> >proper deductions for the building, its contents and the usual
> >business expenses, he also deducted a $10,000 "consulting fee" he had
> >paid the arsonist. An IRS audit two years later landed them both in
> >jail. The IRS disallowed the "consulting fee" and slapped on $6,500 in
> >additional taxes, penalties and interest.
> >
> >
> >What, not the Barcalounger?
> >
> >Then there was the client who insisted on deducting the cost of his
> >television and cable service against his accountant's advice. "His
> >reasoning was that he was a Spanish teacher at school, and the only
> >reason he bought the TV and had the cable was for the Spanish channels
> >so he could be able to teach his students better," Howard recalls. "I
> >told him, well now, not too many people out there can deduct the cost
> >of their TV and cable, but if you can get away with it, knock yourself
> >out."
> >
> >
> >Fun with livestock, part I
> >
> >Back when the Society of Louisiana CPAs manned a tax hotline, few
> >inquiries stumped them. But Al Suffrin, SLCPA's communications and
> >public relations director, recalls one that did: "We took a call from
> >an ostrich farmer in St. Tammany Parish who called in to find out how
> >to go about depreciating an ostrich," he recalls. Strange as it
> >sounds, you can depreciate an ostrich or any other livestock, as long
> >as they're used for breeding.
> >
> >
> >Fun with livestock, part II
> >
> >Which brings us to the tale of the crusty old Texas rancher who
> >insisted upon accompanying his CPA, Raymond Lott of Lott, Vernon & Co.
> >of Killeen, to the rancher's first tax audit. When the rancher's tax
> >depreciation schedule listed 15 or 20 animals as breeding stock, the
> >no-nonsense young IRS agent challenged the old cowboy. "I presume you
> >breed these animals?" she asked pointedly. Without hesitation, the
> >rancher replied, "Nope," sending his CPA into mild tachycardia. After
> >a sufficient pause, the rancher finished the popular Texas joke, "I've
> >got a bull for that."
> >
> >
> >Go fish
> >
> >There was a time when deductions were as plentiful as dinner mints.
> >"Many years ago when I was a young clerk, a local CPA kept a very
> >large glass bowl filled with receipts in his office," recalls Nancy
> >Reynolds of Reynolds & Associates in Naples, Fla. "If a client came in
> >and was a little shy of deductions, they merely dipped into the bowl
> >and helped themselves to some of those glorious deductions."
> >
> >
> >Sic him, Fido
> >
> >Sometimes deductions seem so logical they just have to be legal.
> >
> >"I had a guy come in one time wanting to know if he could deduct the
> >cost of his dog food. His reasoning was that his dog was security for
> >his house, therefore the dog food became a security expense," Howard
> >says.
> >
> >"I kind of liked that one. The IRS loves that stuff."
> >
> >
> >He works in mysterious ways
> >
> >And when all other loopholes seem closed, sometimes only a higher
> >power can help.
> >
> >One fine February, a rookie tax accountant completed a slam-dunk
> >return for one of the firm's old and trusted clients and turned it in
> >to his boss, relates Mary Anne Petesch, a CPA with Hagen Kurth Perman
> >and Co. of Seattle. There followed several loud whoops of laughter
> >from the partner's office.
> >
> >It seems the client had accidentally lost his dentures when they fell
> >in the toilet, and had claimed them on his taxes as an act-of-God
> >casualty loss.
>

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