Crazy tax deductions

Crazy tax deductions

Who knew sweating profusely could get you out of paying taxes?

Tom Walpole, a CPA from Rochester, N.Y., had a client who successfully wrote off the more than $10,000 he paid for central air conditioning in his home and cottage.

He claimed they were medical expenses, since he had a condition involving excessive sweating that made it necessary for him to have air conditioning.

He attached a doctor's prescription to his tax return stating that the loss of fluids from sweating could potentially pose a health threat, and the IRS let it through.

Even nose jobs can be deductible -- as long as you need your nose for work.

A wine store and wine bar owner from California was able to successfully write off his nose job as a business expense last year because he was having problems smelling.

He claimed the surgery was medically necessary for his job, given the several buying trips he took to Europe each year where he needed to be able to smell properly to pick out the best wines.

His tax preparer, enrolled agent Bonnie Lee, deemed it a necessary business expense but told him to get a note from his doctor detailing the smelling condition and prescribing the nose job in case the IRS decided to sniff around.

Because she chose to work at a private Catholic school rather than a public school, a teacher from New York figured she could write off the nearly $20,000 difference in salary as a charitable contribution.

It made sense to her, since she was willing to work for less money in order to help her church.

But her tax preparer, Jeff Gentner, an enrolled agent from Williamsville, N.Y, had to be the bearer of bad news.

"I told her it's redemption versus reduction -- the heavenly rewards will be there, but I can't do anything about the refund," he said.

Just because it's a little racy doesn't mean it can't be considered a valid deduction.

Vincent Porter, a CPA from Arlington, Texas, found that out this year when a client wanted to write off $200 worth of sex toys.

The client, an exotic dancer, was able to deduct the cost of a few vibrators, lubricant and lingerie as business expenses because she used them for her webcam work.

"If a roofer can deduct the cost of his tools used in his line of work, then an 'actress' may deduct her 'tools' used to generate revenue as well," Porter said. "As long as she was not doing anything illegal, then we could support the deduction."

No one wants your used underwear and socks, and the IRS sure doesn't want to see a charitable deduction for them either.

On several occasions, clients have submitted long lists of charitable donations, including many pairs of used underwear and socks they had given to organizations like Goodwill, said Bernadette Schopfer, director of taxation at Maier Markey & Justic LLP.

And if they try to value the underwear and socks at a couple dollars a pair, that can really add up.

"Things are always worth more to the person donating," said Schopfer. "Sometimes you have to step back and say, 'Is somebody really going to use this?' And chances are, they don't want your old underwear."

After a long night of drinking with clients, a business owner got thrown in jail for getting tangled up in a bar fight.

He subsequently attempted to deduct all the drink and dinner expenses from the night -- along with the bail he paid to get out of jail and the cab fare to get back to work the next day.

He was ultimately able to deduct the meal and drink expenses -- and even the taxi fare, because they were work-related. But the more than $10,000 in bail money was a no-go, said Dominique Molina, president of the American Institute of Certified Tax Coaches.

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