By Melissa Clary

It seems as though people will do anything to try and decrease their tax liability. Here is a list of 10 deductions that taxpayers were certain that they could write off;

1. No receipts from above - Putting a few bills into the church offering plate got a client of CPA James T. Campbell in a bind when the IRS asked for canceled checks or receipts to support his charitable deductions. Explaining why he had no such receipts, the taxpayer said he simply throws in cash “as the spirit moves me.” Campbell says the IRS agent paused to consider the taxpayer’s response, and then offered this advice: “I understand how the spirit can move you. So my advice to you is to always take your checkbook to church with you. When you feel the spirit coming on, just take out your checkbook and fill in any amount you think is right, whatever the spirit may dictate. It makes no different how much you give, just as long as you have a copy of the canceled check. This way both the spirit and the IRS will be pleased.”

2. Silence is golden … and deductible - Since we’re on the subject of charitable deductions, Allyson Baumeister, CPA, of had a prominent client who found a creative solution to a chronically noisy next door neighbor: He bought the house from the fellow, ripped it out of the ground and donated it to a local women’s shelter. He then claimed the value of the house as a charitable deduction. “The deduction was limited to a percentage of his income, but his income was such that that wasn’t a problem. From what I recall, the IRS may have adjusted the value somewhat, but it did allow the deduction,” says Baumeister.

3. He took Manhattan, the Bronx and Staten Island, too - When accounting software was in its infancy, a rookie CPA prepared a return for an individual with one small glitch: The software mistook the filer’s address “New York, N.Y.” for the name of a dependent. The mistake went unnoticed by the firm and the client, until one day they received a phone call from the IRS. The agent apologized that the deduction was being disqualified, even though, as the agent politely agreed, it might indeed be justified.

4. But you can write off the pimp hat - When does an entertainment expense exceed IRS criteria? Ed Mendlowitz, CPA had a businessman client wanted to deduct the cost of a call girl he hired to entertain some clients. When Mendlowitz told the businessman he’d have to present the so-called contractor with a Form 1099 to support this business expense, the client declined to do so and dropped the whole idea.

5. 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.”

6. What are you, an Indy driver? New Jersey CPA Elihu Katzman couldn’t believe this deduction: “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 in one year. We asked him if he had any time to sleep, in that he must have spent most of the day and night driving.”

7. The $50,000 business meeting - Imagine a tax preparer’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. The preparer questioned the client and he said, ‘Well, I threw a party for my clients. And the tax preparer said, ‘You didn’t invite me?’ Anyway, they started discussing the expense and the client informed the preparer that the cost was for his daughter’s wedding. But he did invite all his clients. However, he was not allowed to write off his daughter’s wedding.

8. The joys of being a parent – Clients are constantly asking their tax preparers if they can write off loans that they gave 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.

9. Inflating your assets - The story that is consistently brought up at CPA classes is where the topless dancer got breast implants and wrote them off as a business deduction. The IRS challenged her, it went to tax court and she won.

10. Tax Benefits of Being Blind – This one is an old favorite. The government is going to give you a break if you are blind. Just check the box on line 39A. Huh? You are BLIND! Obviously, the idea is you are having someone else do the tax return, but it is still pretty funny at first glance.
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Melissa Clary, CPA is a partner of the Colorado-based C.P.A. Firm Kruger & Clary. For details on their firms services visit http://www.krugercpas.com/

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