September 20, 2021

Tax Deductions

Mitt Romney Left Tax Policy Wonks Feeling a Little Unsatisfied Today

Maybe you didn't hear about it, but last night Mitt Romney and Barack Obama were on TV engaging in a war of words. LOTS OF WORDS. The consensus is that Willard emerged the big victor while remaining pretty vague on details: Romney fiercely objected to Obama’s characterization of his tax plan as a $5 trillion […]

What Are People Saying About Mitt Romney’s Tax Deduction Cap Idea?

Late yesterday, Mitt Romney threw out the idea of limiting tax deductions to $17,000 as part of his strategy to keep his tax plan revenue neutral. Up until this point, the Romney campaign had provided bupkis for details and that annoyed quite a few people who like details. Despite everyone's begging, they continued to stall […]

Deductible or Not Deductible: Bartender Refuses to Serve Drunk; Drunk Slashes Bartender’s Tires (Allegedly)

As you know, we like to check in on our friends across the pond every once in awhile to remind them about Valley Forge and whatnot and to see if they have managed to straighten up. There are problems aplenty for accountants in the UK and some of the strangest ones are shared with the peanut gallery over at AccountingWEB UK. Today’s problem is kind of fun because it may be one that many of you have been privy to.

I think I know the answer to this but will put it out there anyway.

Publican [Ed. note: that’s the landlord of a pub for the Yankees out there.] refused to serve a “customer” drink on Saturday night. The publican found his 4 tyres slashed after closing time.

Tax deduction?

To me, this seems like one of those situations that qualify as “the cost of doing business” (i.e. that’s life) and thus, not deductible. Think about it. You’re a bartender. You deal with assholes. Often times, these assholes get drunk. It’s your job as a bartender to take note when one of these assholes is drunk and refuse said asshole any further service. Since assholes don’t like being cut off (been there myself a time or two) this is usually taken personally and bad decisions end up getting made (e.g. attempt to walk to another bar, awkward sexual advances, vandalism).

Now, our publican friend would gladly trade any potential tax deduction for the chance to catch the guy who slashed the tires but that ship has sailed. My thinking is that he’s just going to have to let this one go. Other opinions? Fire away.

Questionable Tax Deduction of the Day: Engagement Cruise and Wedding Expenses

Every tax professional has run across questionable expenses provided by their clients. Maybe you’ve got a used car-lot proprietor who insists that his hairpiece is crucial to his business appearance and, thus, his ability to put people behind the wheel of their dream ride. Perhaps you’ve got a sociologist that is conducting weekly research in the champagne room of a local gentleman’s club. Or maybe you’ve recently concluded that the process of, and expenses related to, tying the knot have been such a burden that it is completely acceptable to ram it onto your 1040:

Dear Caleb,

I have now figured out why the divorce rate is so high in America. Apparently, according to one of my taxpayers, wedding expenses and cruises for celebrating your engagement are now considered “write-offs.” Unfortunately, I cannot find this particular subject in THE CODE – but I think I’ll take my taxpayer’s word for it.

Maybe you should pass on this tidbit – I sure wish I had known about this obscure write off before I got married, but obviously, it’s time for me to start planning my next one. It’s going to be HUGE!!

– One of the many tax preparers currently wishing they remembered what their home looks like.

Our tipster insists that her client provided the receipts but didn’t want to forward them (something about client confidentiality). Of course, if you’ve got something that tops this, you’re invited to share it with us. In the meantime, any tax sages out there that wish to advise/debate the credibility of including the cost of sheet cakes from Costco, amateur photographers and invitations that may or may not kill you on a Schedule A (or wherever) are free to do so.

Non-Profits are Now Exempt from Political Contribution Rules (Well Three of Them at Least)

Out of millions of non-profit organizations in America, three have been hand-picked by the authors of the DISCLOSE Act, a House bill meant to bring transparency to political contributions.

The bill is inspired by a Supreme Court decision that overturned a cap on corporate contributions to political campaigns. So to compromise and soften the hard-ass bill a little bit, they threw in an exemption for certain non-profits that meet specific requirements.

They must have more than 1 million members, be at least 10 years old and receive no more than 15% of their contributions from corporations to receive this exemption. OK, how many non-profits could that be?


The NRA and 2 others (AARP and the Humane Society).

Reform at its finest, I guess.

Just a note, Charity Navigator doesn’t do the NRA for the following reason:

We don’t evaluate National Rifle Association.
Why not? We don’t evaluate 501(c)(4) organizations because they are allowed to spend a substantial portion of their revenue on lobbying our government and not every donation to them is tax-deductible. You may be interested in our evaluation for The NRA Foundation.

If you’re curious, “DISCLOSE” stands for Democracy Is Strengthened by Casting Light On Spending in Elections and I don’t think light is what we need in this situation. Companies, unions and other groups that spend more than $10,000 would be required to disclose donors who have given $1000 or more.

Why does this matter? Should lobbying groups really receive any tax deductions at all?

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor. You can see more of her posts here.

Looking for a Tax Break? Try Donating Your Erotic Artifacts to the Museum of Sex!

Using a foundation to fuel your for-profit business is never nice, especially when there is an extensive collection of BDSM memorabilia involved.

New York’s Museum of Sex does not claim to be a non-profit but it has obtained over 1,000 items donated through its tax-exempt Muse Foundation for tax deductions. Well? You wouldn’t donate your old brushed-steel bondage machine to Goodwill for the deduction now would you?


Want to help by bequeathing your great-grandma’s old pasties? There’s a handy donation link on their website that explains this bizarre relationship between for-profit museum and non-profit foundation:

The Muse Foundation of New York is a fully registered private foundation affiliated with The Museum of Sex. Its mission is to work with The Museum of Sex to preserve and make available a comprehensive collection of materials relating to the history, evolution and cultural significance of human sexuality.

That’s awesome but does the Treasury realize taxpayers can get fat deductions for contributing to this effort?

Museum founder Daniel Gluck claims that his lawyers allowed this relationship (plenty of for-profit companies have non-profit foundations that share their name) and the Museum would love for its Foundation to be, erm, profitable enough to serve its stated goal of providing underwriting art grants but that plan just hasn’t quite worked out. Yet. After more than a decade of operation. “The Muse Foundation is completely its own separate entity,” he said. “We can’t take money from the foundation and we don’t plan to. We aim to build it up into a foundation whose interests are aligned with the museum.”

Gluck told the NYT that the museum earns 70% of its income from admissions fees – nearly $17 a pop – and the remainder by selling cute Sex Museum tchotchkes in the gift shop (perhaps your dog is sexually frustrated and desperately needs a modern and arty $650 toy to hump?)

Before you ask, no the $300 bunny bondage hood is not tax deductible. But hold onto it long enough and you might just be able to get one for donating it back to the museum if Treasury still hasn’t caught on to this unique foundation/corporation relationship.

Tax Break for Erotica? A Museum Favors It [NY Times]

IRS Doesn’t Care for Kirk Herbstreit Burning Down His Own House

Kirk Herbstreit.jpgABC/ESPN college football commentator and former Ohio St. QB, Kirk Herbstreit and his wife donated their house to to the local fire department back in 2004 and the Herbstreits took a $330,000 deduction on their tax return.
In an extremely convenient coincidence, the IRS, for the first time, challenged the practice of donating individuals’ homes for such purposes the same year.
The Herbstreits were audited and paid back taxes and interest of $134,606 but are now suing the IRS to get that money back.
Apparently this is a matter of debate amongst tax wonks out there, some saying the donation is kosh and some saying it isn’t. You Michigan fans obviously hope Herbie gets stuck paying the extra scratch but the real question is whether Lee Corso is getting to the age where he’s burning down houses just because he’s totally gone senile.
Herbstreit ‘fire’ puts focus on IRS dispute [Columbus Dispatch via TaxProf Blog]