Unusual Tax Deductions: Creative Expenses Can be Valid
A new client, let’s call him David, recently asked me if he could write off his wedding because a majority of the guests are business associates. “Hah!” I responded. “Who do you think you are, Kim Kardashian?” When it comes to tax write offs , the first thing the IRS looks at is intent. A wedding, by its very nature, is of personal intent. And you can’t write off personal expenses—no matter how many of the wedding guests are clients or business acquaintances.
Undaunted, he continues, “Yeah, but what if there’s a business theme to it? I’m in the food industry and so is my fiancé. We’re going for a food-theme wedding. And most in attendance will be food industry-related guests. We’re going to have a sampling table, etc. and if we spin a ‘Food Brought Us Together’ theme wouldn’t that make it at least partly deductible?”
Nice try, but no.
“Then there’s going to be a contest that will be published in my foodie magazine. My wedding will be the example of the personal experience that contestants can draw upon to submit samples of wedding themed foods for a piece called ‘Food Brought Us Together’ for entry into the contest.” His big blue eyes are pleading.
Now he’s got my attention. I’m thinking, oh boy, he has a pretty good point. I picture myself in front of an auditor defending the expenses, and I’m getting excited because I think I could win. I start mulling over the idea. I know we can’t write off the entire wedding, and I certainly will not attempt to deduct certain costs not associated with the food project, for example, wedding portraits of bride and groom or the minister’s fee. However, some of the photography, decorations, and the cost of the food table would certainly be deductible as business expenses and the proof would be in the magazine.
David’s eyebrows shoot up when I say, “Yeah, you know what? Let’s review those expenses and we’ll make a list.”
The total was considerable and I felt that it was completely justified because these were expenses that he would have incurred on this particular business project whether or not a real wedding took place. I didn’t allow a few items regardless of the spin David put on them – did I mention that he’s also a fiction writer? And when all was said and done, the tax savings paid for the honeymoon to a five-star resort in Barbados.
And come to think of it, they’ll be doing some research for a Caribbean cook book while enjoying their married bliss… hmmm, I hope they save their receipts. Again we are looking at personal intent; after all, we’re talking about a honeymoon. But the costs of the different meals they try at various restaurants, visits to local grocers to buy ingredients for dishes they’ll cook in their condo kitchen while there are write offs –and probably enough to pay for their first anniversary trip.
The tax code is set up so you can put a spin on things and this is what I love about taxes and small business – especially small businesses involved in the arts, writing, and other creative pursuits. Expenses incurred for what other business owners would consider fun are write offs for those in the arts.
But even if your business is not involved in the arts, consider your daily activities. Are you taking every possible deduction on your tax return?
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know.” Follow Bonnie Lee on Twitterat BLTaxpertise and at Facebook.