Tax season is upon us. That means we can all use some entertainment.
While many folks dread the process of completing and filing taxes, some see it as an
opportunity to test the boundaries of the system. Here are a few deductions Americans have
taken that have failed to pass muster in tax court, courtesy of kiplinger.com:
- You cannot deduct the cost of a good night’s sleep. A tax preparer who worked from
home escaped to a hotel because her clients were calling in the wee hours of the night and
causing her to lose sleep. When she attempted to take a business deduction for the hotel
expense, the tax court ruled a good night’s sleep is a non-deductible personal expense. - You cannot take a theft loss deduction for poor construction. A couple moved into
their newly built dream home only to realize the builder had cut some corners. The house had
some serious issues, including its foundation. The couple claimed the builder had defrauded
them and took a large theft loss deduction. While taxpayers can deduct losses from a home related theft, shoddy construction doesn’t qualify. - You cannot take a depletion deduction for bodily fluids. A woman earned $7,000 a
year donating blood plasma because of her rare blood type. She took a depletion deduction,
claiming “the loss of both her blood’s mineral content and her blood’s ability to regenerate,”
wrote Kiplinger. While companies that take coal, iron, and other minerals from the ground can
take a depletion deduction, the tax court ruled that individuals cannot claim depletion on their
bodies. - You cannot deduct a business trip if there are no formal business meetings involved.
A repo firm sponsored a trip to Las Vegas for its bank customers. The firm’s employees
chatted with clients about business on the way to Vegas, but no formal meetings were held.
The tax court denied the deduction.
Before you get creative with your taxes, consult with a tax professional.
Sources:
http://www.kiplinger.com/slideshow/taxes/T054-S011-16-nice-try-tax-breaks-rejected-by-the-irs/index.html
https://www.irs.gov/taxtopics/tc515.html
https://www.brainyquote.com/quotes/authors/t/thich_nhat_hanh.html
