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Posts Tagged ‘Tax Deductions’

Business Cats

November 21st, 2017

A 2001 tax court case allowed a business man who owned a junkyard to deduct the cost of cat food for stray cats. The junkyard owner was feeding the stray cats to attract then to his junkyard in order to to get rid of his snake and rodent problem.

The Tax Court sided with the junkyard owner, stating that the deduction for the cat items was allowable because controlling the rodent population was an ordinary and necessary expense for a junkyard.

If you need help with your taxes, give our office a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

Starving Artists

November 20th, 2017

For artists who have always wanted to pursue their dreams of being poor in pursuit of their art, but who have worried about how to pay their minuscule tax bill, there is a special deduction to the rescue. This deduction is meant for actors, musicians, and dancers. Unfortunately, the rules required to meet this deduction can be somewhat cumbersome.

First, the artist must have been a W-2 employee for at least two employers during the year and each employer must have paid the artist at least $200.

Second, the expenses that the artist is deduction must be more than 10% of the total income from the artist’s work.

Third, the artist’s total gross income must be less than $16,000. This number was set in 1986 and has never been adjusted.

The problem with this deduction is that if the artist’s income is less than $16,000, they have little to no taxes to pay anyways. But, just in case, there is a special deduction just for starving artists.

If you need help with your taxes, give us a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

 

Deductible Muscles

November 15th, 2017

Wheir was a body builder who attempted to deduct some body building expenses because he believed he was in the business of body building. Some of his expenses included bison meat, which he ate at the rate of 3 pounds per day, vitamins, protein shakes, body sprays, massage oils, and body building outfits.

The IRS argued that Wheir’s body building was a personal activity and was not a business of any sort and therefor none of the items were deductible.

The Tax Court ruled party in favor of the IRS, stating that the bison mean and protein shakes were not deductible because both of those items could be consumed by the general public and therefor were considered everyday food items.

However, the Tax Court also ruled partly in favor of Wheir, stating that the cost of the lotions and oils were deductible because those certain products were only available to body builders through a body building magazine and therefore were not generally available to the public. The Tax Court also ruled that the body building outfits were deductible because they were not suitable for normal wear and were an ordinary and necessary expense for body building.

If you are having trouble with the IRS and tax deductions, give us a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

Drugs and the Tax Man

November 14th, 2017

Regardless of whether their activities are legal under state law, drug dealers have to deal with special tax laws designed to discourage their activities. IRC 280E states that any deductions from an illegal drug business  are not allowed. The definition of an illegal drug business is defined by the drugs that are deemed illegal by the federal government, not the states. This means that the marijuana dispensaries in Colorado and California must report their marijuana income, but cannot deduct their marijuana expenses.

This rule is all encompassing for expenses related to the illegal drug business, including rent paid for property used in the drug trade, the soil that the drugs are grown in, and even the Ziploc bags the drugs are transported in.

However, there is still hope for all of your druglord clients. The IRS allows drug dealers to take a deduction for the cost of their goods sold. This means the drug dealer can deduct from their income the cost of the drug from their dealer or supplier to reduce some of their taxable income. The IRS even issued guidance, ILM 201504011, to assist drug dealers in trying to determine the cost of their goods sold.

If you are having trouble with the IRS, give our office a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

Crime Doesn’t Pay

November 8th, 2017

In another attempt to claim a deduction out of the ashes of a fire, a taxpayer attempted to deduct the cost of hiring his arsonist. This enterprising individual decided that insurance wasn’t good enough by itself. he decided to also attempt to cheat the government by deducting the $10,000 that he paid to the arsonist. The deduction was disallowed under the same set of rules that say that you can’t deduct illegal bribes, kickbacks, or other illegal payments.

If you need help with tax deduction give our office a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

A Happy Little Tree

September 20th, 2017

bob ross

Bob Ross was fond of painting happy little trees to improve his landscapes, and if you own a home office or your own business property you might want to plant your own happy little tree to improve your landscaping. In Langer v. Commissioner, a sole proprietor who had a qualifying home office was allowed to deduct the costs of landscaping that coincided with his business use of the property. This particularly generous court also allowed a portion of the cost for lawn care and driveway repairs.

If you have a business and need help with your taxes, give our office a call at 816-524-4949 or visit our website at www.hoorfarlaw.com.

It’s to Help Schools

August 24th, 2017

lottery

A California man tried to deduct lottery ticket purchases as donations to the California School system. The claim was that since the proceeds of lottery tickets are supposed to go to the schools, that the tickets could be deducted as a charitable contribution. The problem is that the IRS specifically states that the cost of raffle, bingo, or lottery tickets are not deductible. Just a friendly reminder, if you win the lottery the proceeds are taxable so be sure to find yourself a tax attorney if you win the powerball.

If you or some one you know is having some tax issues, give our office a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

Stop, Thief

August 21st, 2017

pepper spray

In another case of a denied medical expense deduction, a woman tried to apply the old maxim “an ounce of prevention is better than a pound of cure” by claiming that her pepper spray was a medical expense. Her argument was that an attack would kill her due to her weakened heart. The issue with this one is not that she didn’t suffer from a medical condition, it is that there isn’t much of a connection between pepper spray and treatment of a heart condition. The pepper spray also can’t be considered to prevent disease because it didn’t actually prevent her weak heart condition. There just wasn’t enough of a connection between the pepper spray and her condition to justify the deduction.

If you or someone you know is needing help with taxes, give us a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

Ink Me

August 16th, 2017

tattoo

While beauty may be in the eye of the holder, the IRS says it’s not subjective whether expenses to improve or alter your looks are deductible. The rule still applies that you can’t deduct cosmetic surgery or similar items. This means that tattoos, body piercings, and most cosmetic surgeries are not deductible. However, some forms of cosmetic surgery are deductible, if for treatment of a disease or condition. An example would be skin grafts and surgeries for a burn victim.

Regret is not a medical condition, so the removal of that full back tattoo of your first crush is not deductible.

If you are dealing with some tax issues you can contact us by phone at 816-524-4949 or visit our website at www.Hoorfarlaw.com.

It’s the End of the World

July 12th, 2017

fallout shelter

During the cold war, a forerunner in the preparation movement decided to build himself a nuclear fallout shelter. He then tried to offset the expense with a tax deduction, claiming the cost as a deduction for preventative medicine. The IRS denied his deduction and so far World War 3 hasn’t happened so his attempted foresight didn’t really pan out for him; a lucky break for the rest of the world.

It may not be the end of the world, but having tax issues can feel like it. If you are having trouble with your taxes give us a call at 816-524-4949 or visit our website at www.Hoorfarlaw.com.