The subject of taxation is not normally a welcomed topic – here are some “fun” court cases provided by Kiplinger’s.
“A Little Peace and Quiet”
A busy tax preparer ran her business from her home. During tax season, she felt so harassed from clients calling her at all hours of the day and night that she occasionally booked a room at a local hotel for some peace and quiet. On her own return, she deducted the cost of this rest and relaxation as a business expense. Unfortunately for her, the Tax Court ruled that the cost of her good night’s sleep was a nondeductible personal expense.
A wife was sent to jail for killing her husband. Although she was named as the primary beneficiary of his 401(k) plan, state law barred her from receiving any of the funds because of her crime. The account was paid to their son instead as the secondary beneficiary. He claimed that his mother should be taxed on the payout as the intended beneficiary. An Appeals Court gave him an A for effort but an F in taxation, ruling that he owes tax on the distribution.
“Wrecking a Rental Car”
An airline employee needed to get to New Orleans but was stranded by heavy fog. He worked out a great deal with a rental car company where he paid nothing for a car that the company needed driven to New Orleans. Unfortunately, he wrecked the auto in Mississippi and had to pay for the damages. He tried to deduct the payment as a casualty loss, but the Tax Court denied his write-off because he wasn’t the owner of the vehicle.
Now here’s a little good news:
Kiplinger’s recently a report on “The LEAST Tax Friendly States in the U.S. for 2016”.
The good news is that Ohio, Kentucky, Florida, and Indiana are NOT on the list.
Here are the factors that were considered to create the list: income, property, gas and sales tax.
In order from the LEAST tax friendly, here are the top states. (Before reading further, it might be fun for you to see how many of them you could guess.)…. California, Hawaii, Connecticut, New York, New Jersey, Minnesota, Maine, Vermont, Illinois, and Rhode Island!
From our Blogs page, simply search for “tax” to find additional articles of interest.
Please note that, while we are not accountants and cannot provide tax advice, we do work cooperatively with very qualified accountants. The information that we will share is available to the general public and should not be construed as giving income tax advice.
Barbara A. Culver
CFP®, ChFC®, CLU, AEP®