Lunch with Cohorts
Remember how we said a few minutes ago? That talking business over lunch doesn’t mean you’ll get a tax cut? Well, a lawyer clearly hadn’t heard the story! Him and his colleagues went out for lunch to discuss business every day, including settlements and case assignments.
The IRS couldn’t believe he had the audacity to make Uncle Sam pay part of the tab and the Tax Court agreed. Even though they were talking about business as usual, the meals still qualified as nondeductible personal expenses.
Lesson learned! If you’re going to invite a colleague out for lunch and dinner, don’t expect somebody else to pay for your meal!
A Fish Tank
This entry should act as a lesson and a word of caution for anyone who plans on hiring someone for help on their taxes.
The IRS noticed a couple of red flags when a couple filed their tax returns late because their forms were filled with bizarre deductions. For example, they attempted to deduct a fish tank and dining room furniture. Not only were they slapped with a big tax bill, but they also had to pay a late-filing penalty.
Their excuse? The accountant that had previously worked with them killed her husband and was sent to jail. Then, the person who took over the office was apparently incompetent, so they argued they should be excused, but the Tax Court did not side with them.