One of our colleagues

[Mr. Pencil]

Consider the sad case of Joyce Linzy. She ran a little tax prep business out of her house. We all know how frustrating this line of work is, and how important it is to get away for a few days. But IRS has no mercy, and insisted the vacation was not a business expense. They wouldn't even let her deduct her losses, even though she gave them the casino statement! In fact they disallowed everything including her home office, citing some obscure tax code about substantiation or some such nonsense.

Then they looked at the rest of the return. Actually they probably started here; anyway, they dinged her for Social Security Disability benefits which was totally unfair because she had to pay back three years of otherwise tax-free Met Life payments. They insulted her, too--said she was "negligent" and stacked on penalties.

Naturally she appealed. She argued the case herself, and the judge was impressed that she "credibly testified." But he was just stuck on that tax code thing. [TC Memo 2013-219]

[taxxcpa]

A vacation should qualify as a medical expense required for maintaining your mental health. Losses at a casino should be allowed as an educational expense to improve your skills in your present occupation--since it is always a gamble when you enter a deduction or fail to report some income. Doing EIC returns is the biggest gamble of them all.

[Richcpaman]

Great Case isn't it?

Two different years. She won in year one, but blew it all up in year two.

Maybe she went to one of those "Tax Coach's" Seminars?

Rich

[joanmcq]

Maybe if she had taken CPE she would have known her arguments wouldn't fly.....and might have improved her record keeping...