Monday, January 21, 2008

MORE Actual IRS Quotes!

Working at H&R Block once again makes me cross paths with these actual IRS quotes (find them yourself at

From Publication 17, which is almost a "bible" of sorts for tax preparers, there is a section on things which are "nondeductible expenses": These cannot be deducted on Schedule A. The list includes.... [from pp. 196-197]

"You cannot deduct fines or penalties you pay to a governmental unit for violating the law."

"You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer."

"You generally cannot deduct amounts paid or incurred for lobbying expenses. These include expenses to:
  • Influence legislation,
  • Participate or intervene in any political campaign for, or against, any candidate for public office,
  • Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or
  • Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials.
Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities."

"You cannot deduct personal legal expenses such as those for the following: [At this point, a list of fairly common personal legal expenses is given. But it includes this curious one:]
  • Breach of promise to marry suit."
"Professional Reputation. You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation."

"Wristwatches. You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties."
Publication 535, Business Expenses [p. 42], has more to say about bribes and kickbacks:
"Bribes and kickbacks. Engaging in the payment of bribes or kickbacks is a serious criminal matter. Such activity could result in criminal prosecution. Any payments that appear to have
been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law.
"Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes.
"Meaning of 'generally enforced:' A state law is considered generally enforced unless it is never enforced, or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances.
"Kickbacks. A kickback is a payment for referring a client, patient, or customer. The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment."
So, No, you can't deduct these either. For my first post of Actual IRS Quotes, click here.

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