I don't think there is anything worse than these. So, client w/ a 2K 1099 for home parties wants to take a 1,500 mile deduction because she traveled a home party hosted by her daughter. Appears the gross profit on the party b4 mileage was around 150. I told her I would not include that on her return. She went on and on about how all the other consultants do it and the company tells them that they can travel anywhere and write off the mileage as long as they hold a party. I must have told her at least 3 times during the meeting that she was welcome to take her return to someone that would take the deduction but that I would not. Does any legitimate preparer actually prepare a return with something like this?
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Sure. And if she puts a sign on her car for the business, then ALL of her miles are deductible, right? :-) Just kidding.
I would print out the portion of Publication 463 that shows that the travel must be "primarily for business".
If she can show that she was only there for one or two nights, MAYBE it would be a deduction. Probably not, but MAYBE. Any more than that and it would not be "primarily for business".
As for your actual question if any "legitimate tax preparer" would take the deduction, not many would. However, unfortunately there are A LOT preparers that either don't know the rules, and/or will do just about anything the taxpayer asks them to do. -
Does she have a qualified home office? If not, her mileage might be commuting. How long was the party? Two hours? Did she stay for more than that day? This really sounds personal when it's her daughter. Is it usual and necessary to travel 1,500 miles to earn $150? She probably bought her daughter a new living room lamp to show off her products, right? I've seen that one. Didn't put the lamp on the return!Comment
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In our practice most of us have at some point in time faced clients who had business expenses that did not meet the smell test. I show my clients the IRS requirements for documentation and the rules. Once they think clearly with little assistance from me most back off from taking an aggressive position. Some who will not absolutely back away and i know that I can not prepare that return in good faith, I just have to say that we must part ways as friends!
Just today a new client wanted to deduct some home repairs (Kitchen remodel) on her 2015 return in anticipation of her being self employed by summer of 2016 after she retires!Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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If she is a consultant for the company then she is an IC. Does she file a Sch C for this business? Does she have a home office? I don't see where the IRS restricts mileage in this circumstance. This is same as Avon, Mary Kay, etc isn't it? Or you could tell her to show you her mileage log and a document from the company that cites the IRS rule on this deduction. I agree it seems outrageous.Originally posted by kathyc2 View PostBelieve nothing you have not personally researched and verified.Comment
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I just don't think it's a legit business purpose to travel to a family member when you know up front it will cost more than the income you will make. I gave her ample opportunities to go somewhere else if she wanted to claim it.
But, based on some responses I may need to change the way I do business. Seems like maybe I should extend returns of family and friends across the country and then travel all summer to prepare them and write off my travel as a "business" expense.
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