5. The woman that hired her own underage children to work for her, paid them in pizza and deducted these costs as business expenses
This woman who also worked as a tax preparer hired her kids aged 8 to 15 years old to do some small jobs for her. She even filed W-2 forms for them, however when it came to payday, the kids were eating their salaries.
That’s because their wages were pizzas. The Tax Court declined it (shocker).
6. The police officer who threatened the doctor his wife was having an affair with, with a lawsuit, settled and claimed it was a tax-free gift
A police officer found out his wife was seeing her doctor way too many times. They were having an affair of course, and when the husband found out he threatened the doctor with a lawsuit.
In the end, the doctor paid $25,000 to settle and the husband claimed the sum was a tax-free gift, but the Court said that the money will be taxed as an income since it came from a settlement.
Fair enough.
7. The lawyer who deducted prostitutes and pornographic material as medical expenses
Yes, you read that right. The lawyer did so and argued that it helped his health in a positive way and that it had beneficial effects on his sex therapy.
Too bad the Tax Court ruled it illegal, we wanted to try this.
