Donald Trump Investment Seminar

[Zee]

I read a similar earlier post on deducting rental investment seminars on Schedule E. I'd like to revisit the questions with a "twist" (why do I get these kind of clients?). Taxpayer is an LLC that elected to be treated as an S-Corporation for taxes. The three LLC businesses are; (1) massage therapy, (2) rental property, (3) meat/farm consulting (yep!...same client I had questions on how to report this on the 1120S). He also purchased and is remodeling a property to sell (he had hoped to flip it earlier) not a part of the LLC.

I finally met with the clients today. He attended a Donald Trump investment seminar of some kind in 2006 at a cost of almost $5,000. In the earlier thread, the client was a Schedule E landlord. Some thought since a rental wasn't a business, the investment seminar (Carlton Sheets) wasn't deductible. Others disagreed.

I'm wondering how the same group views this situation? Is this a deductible expense?The client is a Sub-S Corporation, and will have both a Schedule E and Business Income. I honestly don't know if any of the businesses are truly related to any of the three businesses...although the client indicated that's how he decided on the massage therapy business.

[Black Bart]

I dunno, but

if they shop around there's not much doubt they'll find somebody who'll write it off if you don't. Usually, I tend to lean toward "When in doubt -- deduct," but $5K's a lotta dough, so I'd be leery of it (probably wouldn't unless I knew for sure) and all that potential tax, penalty, and interest accumulating until 3-15-10.

As you said, the board's divided, so what to do? There's a place you could write If you had the time, but tomorrow's the day (unless you extended), ain't it? I had a thorny question (unrelated to this subject) once and wanted a written opinion on it to cover myself and to get the deduction for the client if possible. So...I called IRS and they told me to put the question in writing and send it to:

Internal Revenue Service
400 West Bay St., Suite 35045
Jacksonville, FL 32202

I wrote March 31, 2004 and got my written and satisfying/conclusive/yes/no/straight from the horse's mouth answer back on May 7,2004.

If the address is still good and you have the extended time then......

Sorry I couldn't tell you more. Usually on the small-dollar seminars I write them off as expense. Nothing ever kicked back yet but, as you know, that doesn't prove anything. Good luck.

[taxea]

Donald Trump Investment Seminar

what did the seminar cover in regard to investments? If it wasn't rentals then it doesn't qualify as a business expense. If I remember correctly from Pub 17 "miscellaneous expense" this is not a deductible item. taxea

[Zee]

what did the seminar cover in regard to investments? If it wasn't rentals then it doesn't qualify as a business expense. If I remember correctly from Pub 17 "miscellaneous expense" this is not a deductible item. taxea

The client couldn't provide a class outline or summary. I think it included finding the right kind of business, etc.

At any rate, in a follow-up conversation I explained that the deductibility was very questionable. The client's wife decided for him...not to take the deduction. She said she wanted a "clean" tax return without any questionable items. I gave them a "choice" with my cautions.

[taxea]

Donald Trump Investment Seminar

The clients really don't understand the rules. That's why they have you. Never be afraid to let them know when something isn't deductible.

I send worksheets to my clients and if there is anything in their documents that doesn't qualify, I just put "n/a" next to it.

I once had a police officer that wanted to take a religious seminar because "it would help him do his job better". I could see where he might think it could aid him in "counseling" part of his job but, told him that it was a grey area and the IRS may not approve of the justification for it. The option is the client's in what I consider grey area as long as they are willing to take the risk of disapproval by the taxing authority. However, if I don't think I can justify the deduction or if I know it is not deductible by the rules (panty hose or makeup for professional women) I just tell them it won't fly.

In your case, now that I see that the seminar addressed "how to get into the right business" it would definately not be deductible. taxea