The diary of Tax E. VaderCPA Martin Abo of Voorhees, N.J., can read his clients like a book. The problem is, sometimes they make stuff up.
"We had a contractor who was getting audited by the IRS and they requested that he show required substantiation for significant client development, aka meals and entertainment deductions," Abo says.
"He came back a week later with minimal receipts but did have a very effective diary showing so very much of the needed information -- where, when, how much, names, etc. -- for us to provide the agent.
"One problem -- the diary was one of those any-year diaries that just go from Jan. 1 to Dec. 31, and the small print showed a copyright date one year AFTER the calendar year being examined. Not only that, every page was written in the exact same color ink! Busted! The contractor was politely told to find someone else to represent him."
The rat race write-off
In past editions of crazy tax deductions, business owners have tried various schemes to claim their dog as a business expense. Some claimed them as a security expense. One insisted that he had hired his hound as an independent contractor. (Can you dig it?) Another actually claimed his dog as a dependent.
A New Jersey CPA can now give equal time to crafty cat lovers:
"I looked on the client's Schedule C for his sole proprietorship and he had an entry for 'exterminating expense,'" the accountant says. "Turns out he took his cat to the vet."
Now that's full disclosure!CPA William Hanna runs a nice, family-friendly office in South Bend, Ind. But every so often, a new client arrives to shake things up.
"One time, a woman came in who was a self-employed entertainer at one of our local gentleman's clubs. She was inquiring about deducting the cost of her tattoo," he says.
"Before I even had a chance to respond, the next thing I knew she had turned around and dropped trou and was showing me the tattoo to determine whether or not it was going to be deductible!"
Once he'd recovered, Hanna explained that the tattoo in question was not tax-deductible because it is not unique to her business.
"Their work clothes, such as they are, are deductible because they are specific to their business; they aren't everyday street clothes that you would wear to Kmart or Target. But you could have a tattoo and not be in that business," Hanna says.
"On the other hand, if she'd used a boa constrictor in her show, she could deduct the cost of it."
Speaking of unmentionables ...As long as we're on the topic, an Oklahoma CPA had sent his condolences to a close client who had just lost his wife following a long battle with cancer.
"My grief poured out for the family and I respected his great strength," he said.
But as the CPA found out, grief can take some strange turns.