Tax Deductible???

[Terry D EA]

I think not. Had a client in today that has ventured into offering cell phones, home security systems, and home VOIP phones and has been told that any of the items and services he puts in his own home for personal use that he buys from his own business are a deductible expense. Really??? We put his return on hold until one of the guru's from this company (crappy company) either calls him or me. My client got mad because he insisted these people were right. I politely disagreed and asked him if these folks held any degree, registration, enrolled agent, or any other license that gave them the right to offer tax advice? He said he would let me know.

This reminds me of the ads that you can buy a big flat screen for your home/office and deduct it. I guess you could if you could prove you used your living room or family room to entertain clients. Oops wait a minute only 50% of it.

[CathysTaxes]

One client (owns tree trimming business) went on a snowmobiling trip with another client (he also owns tree trimming business). The idiot owner of the lodge they stayed at asked him if he wanted a receipt so he can write it off on his taxes as 'entertainment'. Huge argument as I tried to tell him the info needed and he complained that he wasn't going to write a 'narrative' for it.

[Terry D EA]

Don't you just love all these folks. Question is, why do our clients belive them and not us??? And then, they look at us like we are the evil red headed step child when we tell them sorry but you can't do that. Go figure.

[CathysTaxes]

Don't you just love all these folks. Question is, why do our clients belive them and not us??? And then, they look at us like we are the evil red headed step child when we tell them sorry but you can't do that. Go figure.

Because these fools tell the clients what THEY WANT to hear. We used to have friends that owned a restaurant. They were not paying their servers an hourly rate (just letting them keep their tips - how generous of them). Hubby tried to explain to one of the brothers why you can't do this. They were at the bar. Of course a bar buddy tells them otherwise and the idiot brother agrees with him.

Then I had a client who AGAINST my advice opened up a Delaware Corporation (we're in Illinois). He ended up having to open up a new business in Illinois (IL requires that foreign corps register and the annual fees are higher). Then one FORMER client opened up a scorp (again, on the advice of a buddy, probably drinking buddy) but treated the corp checkbook like his personal one. Over 90% of the transactions were personal in nature.

[kris1]

Recently I have read one article where saying , you must decide whether to itemize deductions or to use the standard deduction. The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction.Generally, you must decide whether to itemize deductions or to use the standard deduction.

[Crank]

hmmm?

[CathysTaxes]

Recently I have read one article where saying , you must decide whether to itemize deductions or to use the standard deduction. The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction.Generally, you must decide whether to itemize deductions or to use the standard deduction.

We're tax professionals, not idiots. What's your point?

[TaxesNE1]

I was contacted by a lawyer who said he was being audited and wanted me to take over. The previous representative was himself a tax lawyer. The tax lawyer liked going to the bar much more than meeting with the IRS to review the client's documents, so, he just pointed to the conference table piled with documents and let the auditor get to work while he went "out to lunch." The resulting audit report showed a potential liability in excess of $50,000. It seems the tax lawyer had not prepared the original return. That was done by a CPA who was sent to prison for aiding and abetting tax evasion. So, we have two "professionals" involved here. I decided to audit the books. After checking on a few tax entries, I could see that most of the tax information had been made up. I put the whole mess on a general ledger and balanced to the penny. I prepared an amended return and requested an audit reconsideration. I walked in to the IRS office only to find a U.S. Attorney waiting for me. When he learned that I was neither the client nor the preparer of the original return, he went back to his office and left me to go over the amended return with the auditor. The client was due a refund of over $10,000. Why? The jailbird CPA had deducted an entire ranch as an entertainment facility (which are never deductible). But upon obtaining records from the ranch and its use, I was able to treat it as a second office. The IRS had no problem with it. The lawyer-client did not go to jail. It would have been a tough prosecution anyway, since the original return had been filed in person and not through the mails (take note: most prosecutions relate to mail fraud). The point is, you may often find perfectly legal ways to take deductions where others did not.

It used to be a well-known admonition that a smart tax man never "files" a return for a client. You could fill an encyclopedia with all the reasons for not falling in to that trap.

[Crank]

Interesting.

And I thought I couldnt learn anymore from this thread beyond the excelllent "Standard Deduction vs. Itemized Deductions" post by kris1 a few posts up.

[Terry D EA]

I think, in my scenario however, that it would be a hard sale to be able to deduct your primary residence as entertainment. I do agree with deducting a portion that is used for marketing your product as you show the use of it in your home.