27 Days and Counting

In two days it will officially be spring. In 16 days the Easter bunny magically hides eggs. But in 27 days the American public magically tries to keep its money from the Infernal ... oops ... Internal Revenue Service (IRS) as the deadline for filing 2009 taxes descends upon us.

According to one popular internet source, an IRS publication states: "If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner."

While this is comical, it is true; theves must pay income tax on stolen property they keep or face tax evasion charges. But since the Constitution protects individuals from self incrimination, you can tuck it into the 'Other Income' line (this is Line 21 on the 2009 IRS Form 1040).

Way back in 1927 a liquor bootlegger was charged with tax evasion for not reporting his illicit income, and he argued in doing so he would have incriminated himself in violation of the Fifth Amendment guarantee. Justice Holmes, writing for the U.S. Supreme Court majority first dismisses the idea that illegally acquired income is exempt from income tax.

That decision can't help but bring the question to mind: "How many politicians take advantage of the 'Other Income' line?

A creative pursuit this time of year is finding deductions that allow us to keep as much of our money as possible. Some have even attempted to write-off money spent for a wedding gift for the boss's daughter, claiming it as an employee business expense. This wasn't successful.

The United States Tax Code consists of some 20,000 plus pages and loopholes do exist.

Here is a sampling of just a few from free beer to free pet food and  free boob jobs (breast augmentation actually).

In a novel promotion, a gas station owner gave his customers free beer in lieu of trading stamps. Proving that sometimes beer and gasoline do mix. The Tax Court allowed the write-off as a business expense.

Here kitty ... kitty ... kitty.

A couple who owned a junkyard was allowed to write off the cost of cat food they set out to attract wild cats. The feral felines did more than just eat; they also took care of rats and snakes on the property, making the place safer for customers.

When the case reached the Tax Court, IRS lawyers conceded that the cost was deductible.

Have a breathing problem? Put in a pool, you might be able to deduct it.

A taxpayer with emphysema put in a pool after his doctor told him to develop an exercise regimen. He swam in it twice a day and improved his breathing capacity. Turns out he swam in the pool more than his family did.

The Tax Court allowed him to deduct the cost of the pool (to the extent the cost exceeded its added value to the property) as a medical expense because it's primary use was for medical care. The court also allow the cost of heating the pool, pool chemicals and a proportionate amount of insuring the pool area as medical expenses.

Among some of the more practical deductions permitted include allowing parents to deduct children's music lessons and the cost of buying a clarinet. The IRS ruled it is a legitimate write-off on the grounds that orthodontists said clarinet playing can help with kids' overbites.

Also permitted is the cost of transportation to and from an Alcoholics Anonymous Center.

But examine write-offs closely.

In an effort get more tips, a stripper with the stage name "Chesty Love" decided to get breast implants to make her a size 56FF. A female Tax Court judge allowed Chesty to write off the cost of her operation, equating her new assets to a stage prop. Alas, the surgery proved to a problem for poor Chesty. She later tripped and ruptured one of her implants.

I am reminded of a statement once made by former President Jimmy Carter who said: "the U.S. tax code is a crime against humanity."