“Of Course They’re Tax Deductible” Part 1
I have a client who farms… and produces fish… and writes books… and does a bit of almost everything. He is smart and witty. At tax time, our review of income and “deductible” expenses can be very entertaining. He surprised me a few years ago by including a whole chapter in his new book dedicated to our client-CPA dialogue, even titling the book after this infamous chapter.
With Jim’s permission, I’m posting the entire chapter (in the next few posts). Jim is a great writer and cartoonist as well (the illustrations are his). And yes, he has exaggerated things a bit, as any good author taking literary liberties should, but the spirit of Jim’s intelligence and wit shines through in his story. And perhaps… just maybe… he hasn’t exaggerated things as much as you might think (client confidentiality, you know).
“Of Course They’re Tax Deductible” by Jim Schwartz
“Well, they are farm dogs,” my accountant, Rick, said. “And you do have a farm… so there shouldn’t be any problem with you writing off their food costs on your taxes.”
Now, I hate paying taxes just as much as anyone else. But, what’s really irritating about handing all that money over is when it gets wasted on things nobody else cares about except the guy who got the million-dollar grant to determine if crunchy peanut butter was better for you than creamy peanut butter. I believe that one made it through Congress during the Jimmy Carter administration. There were a lot of nut cases up for consideration while he was in office.
Does anyone really think it makes any difference to people at all if crunchy is better for you than creamy? Look at all the stuff people eat that they already know is bad for them and they don’t care. One more thing added to the list isn’t going to throw this country into some kind of a controlled dietary recession.
Quite a number of years ago, I heard about the government being scrutinized for spending six hundred dollars each for screwdrivers. I’m sure that most of you will agree that sounds a little excessive to say the least, but let’s give the government credit when they deserve it. The did actually get something for the tax dollars spent this time. I’m sure to Congress it seemed like a really good deal at the time, too. They were finally getting a tool that would help them do the very thing they have been doing to the Taxpayer all along. And to think, some people actually thought that a Senator’s job couldn’t get any easier.
And, let’s not forget about the one when the BLM asked Congress for extra money to pay for cattle guards in the Northwestern United States. By extra money, I don’t mean to imply that cattle guards cost any more in the Northwest than they did anywhere else. That’s just where they were wanting to put the cattle guards and they seemed to be needing more of them in the Northwest than anywhere else at the time. When Congress was told that each cattle guard cost forth thousand dollars that year, Senator Dork from on of the Easter states strongly protested.
“Forty thousand dollars!” the Senator objected. “Surely someone can be found to stand there and guard cattle for less than forty thousand dollars a year.”
I have always tried to be very reasonable about the things I take as deductions on my taxes. If it sounds reasonable, I think I should be able to take it. My accountant, on the other hand, substituted the word “allowed” in the place of “reasonable.”
When I told Rick, “OK, I’ll allow it,” he rephrased his substitution to include “Allowed by the IRS.”
I then asked him how much it would take to get him back on my side.
“I am on your side,” Rick assured me. “If you take too many deductions, or any that raise suspicion, you could increase your chance of being audited by the IRS.”
“That’s alright,” I told him. “Then I’ll write off the cost of the audit if they make me pay anything, the time I ahve to take off from work to go to it, travel miles to and from the audit, lunch if it takes too long, and a new pair of shoes and new underwear.”
“I really don’t see how you can take any of that as an allowable deduction,” he said.
“Why not?” I asked. “I’ll write a story about it for my next book. That way I can call it research, or something. Maybe they would prefer literary research. What do you think?”
“Interesting,” he said. “And what about the other things you mentioned you were going to deduct?”
“Well, it would be their fault I had to take time off from work, so I think it’s only reasonable that they should have to allow that,” I said. “And, you tell me I have to keep a mileage record to and from the shows I go to selling my books, so… trust me, if I’m audited, I will put on a show alright. If I could get just one person there to buy a book wouldn’t it count?”
“Well… maybe,” he sort of agreed.
“And as far as lunch goes,” I continued, “there ain’t no IRS office in this town, and you say I can deduct out-of-town meal expenses.”
“Hmmmm,” Rick sighed, obviously pondering the legitimacy of my reasoning. “What about the shoes and underwear?”
“I have to wear something to the show,” I said. “Those IRS people are greedy. I don’t want them to think they can beat the pants off me and take the shirt off my back. You want to go with me?”
“Not even if you pay me,” he answered.
“There’s something else that I have been wondering about, also,” I said, since he was evidently finished with the possibilities of an audit.
…Continued on “Of Course They’re Tax Deductible” Part 2
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