It's Tax Time Again

At this time of year I return to my roots as an accounting professor and look for the strangest tax deductions claimed. Have I got a story for you. On September 14, 2009, the United States Tax Court ruled that a New York tax lawyer could not deduct medical expenses over $100,000 that he paid for prostitutes and pornographic materials [Halby v. Commissioner, T.C. Memo. 2009-204 (Sept. 14, 2009)].  The IRS argued that the lawyer was not entitled to a deduction for amounts paid for books on sex therapy and pornographic material because those amounts were incurred for his general welfare, not pursuant to a doctor’s prescription or for a specific medical condition. According to the Court ruling, “The petitioner frequented prostitutes in New York. Petitioner did not visit these prostitutes as part of a course of therapy prescribed by his doctor, nor did he ask the doctor to prescribe any sort of sex therapy.” [Dear Tax Court: You mean it would have been deductible if the doctor had prescribed it?]

Some states and even countries have what can only be termed bizarre tax items. I found the following items on the Tax Club blog website (http://thetaxclubblog.com/?p=128). Most have been verified (I made up the last one myself):

The Bagel Tax in New York (where else):

Bagels that have been prepared (e.g. sliced, buttered, toasted, etc.) at your local deli, come with an additional sales tax but you can avoid the tax by buying your bagels whole and doing the “preparation” at home.

The Belt Buckle Tax in Texas (don’t mess with Texas):

Belts are tax free in Texas, but if it comes with a buckle, prepare to be taxed!

The Weird Baby Name Tax in Sweden

The Swedish Tax Authority has the jurisdiction to decide whether baby names chosen by parents are acceptable or not. Names labeled “weird” or “unacceptable” by the authority are not prohibited; but they are taxed.

The Prostitution Tax in Germany

Not only is prostitution legal in Germany, but they tax you on it! Any income made from selling one’s body, is subject to taxation. [Dear Germany: Does that include selling body parts?]

And my personal favorite: The “Mama’s Boy” Deduction in Italy

Italy's economic minister sparked an uproar in 2007 by offering 'big babies' a tax break if they let go of their mother's apron strings and left home. More than a third of Italian men over the age of 30 live at home with their parents, a phenomenon blamed on sky-high apartment rents and bleak job prospects as much as a liking for mama's cooking. Economy Minister Tommaso Padoa-Schioppa offered to come to the rescue with a € (Euro)1,000 tax break (about $1,416) for 20 and 30-something Italians who rent. He said, "We must send those we call 'big babies' out of the house".

Here’s mine: The Law & Order Tax in Any Country

Tax every spin-off or rip-off of the original Law & Order TV show (1990) that ran for 20 years. You think you know everything about the show and its spin-offs, well read on. The first spin-off was Law & Order: Special Victims Unit in 1999. This is arguably the best and most successful of the L & O brand. Law & Order: Criminal Intent premiered in 2001. After 8 seasons, the show was canceled but don’t fret it’s coming back for a ninth and presumably final season in May on USA with the original cast starring profiler and interrogator extraordinaire Robert Goren played by Vincent D’Onofrio. Did you know there was a Law & Order: L.A.? Like most things in L.A. it went out of style after a few segments, but it’s also coming back on Monday, April 11 with a new two-hour episode on NBC with the ever-popular Alana De La Garza as assistant district attorney Connie Rubirosa. Even the Brits have gotten L & O fever. Law & Order: UK has been adapted from the US series and plays on BBC. You think I’m done? There’s been one TV film, Exiled: A Law & Order Movie in 1998 that reprised Chris Noth’s role as Mike Logan, the detective who punched out a NY councilman and was exiled to Staten Island.  There have also been four video games where players investigate a crime with interviews of witnesses and examination of evidence. After the arrest is made, the player then prosecutes the case with challenges such as selecting appropriate questions for witnesses on the stand, recognizing improper questions to raise objections and selecting the most persuasive arguments for the judge to allow certain evidence in court.

Enough already! Let’s impose a 50 percent tax on all future revenues from the L & O brand. That will take care of our $1.3 trillion budget deficit from 2010 in no time.

Blog by Steven Mintz, aka Ethics Sage, April 9, 2011

Video from YouTube