10 wackiest tax write-offs
6. The 'Zoolander' deduction
Those who work in front of the camera for a living -- like Derek Zoolander in the 2001 film comedy -- are often inclined to work their accountant to deduct all manner of personal property and perks as business expenses, from full wardrobes to back waxing. "We have public speakers and we help them understand that they cannot deduct all of their clothing, even though they wear it onstage," says Dallas CPA Ken Sibley. "Models can deduct a lot of makeup and certain pieces of apparel, but it has to fit the rules. We don't let them deduct the pedicures, manicures and back waxing for therapeutic reasons."
The craziest "Zoolander" deduction? New Jersey CPA Alan Sobel wins the prize: "Deductions are sometimes claimed for money given to infants for "modeling" for their parents," he says. Seriously.
7. What are you, an Indy driver?
New Jersey CPA Elihu Katzman couldn't believe this one: "We had a client-salesman that was asked the number of miles he used his car for business that year. He insisted that he drove 60,000 miles, all for business. We asked him if he had any time to sleep, in that he must have spent most of the day and night driving."
8. The $50,000 business meeting
Imagine Hatter's surprise when a client-attorney listed $50,000 in entertainment expenses on his tax return -- quite a chunk considering the guy's gross income was in the $300,000 range.
"I said, man, what is that? He said, 'Well, I threw a party for my clients.' And I said, 'You didn't invite me?' Anyway, we started going through it and he said, 'Walt, I've got to tell you, that was for my daughter's wedding. But I did invite all my clients.'
What was the lawyer's occupation? Envelope please. Criminal defense attorney!
9. Finally, the Social Security crisis solved
Warning: If parents ever start documenting this deduction, we'll no longer need to worry about Social Security.
Marcia Geltman, CPA with Nisivoccia & Co. in Randolph, N.J., says parents have asked her more than once if they can claim a bad-debt loss from unpaid loans to their children.
"The correct answer is, unless you have documentation verifying the existence of the loan and have taken legal action that resulted in a determination that the loan is not collectible, no deduction is allowed," she says. "Let us hope that, in the long run, we receive more blessings from our children then these momentary aggravations."
10. Inflating your assets
It's a classic feel-good-all-over tax case that has grown to mythic proportions over the years. Hadder explains: "The one they always talk about at CPA classes is where the topless dancer got breast implants and wrote them off as a business deduction under Section 179 and treated them as a capital asset, as an ordinary necessary business expense, and was able to deduct them. The IRS challenged her, it went to the tax court and she won."
Watch: "Filing taxes -- software vs. accountant"
|-- Posted: March 21, 2008