Tax deductions that shout 'Audit me!'

The car

I've had a number of clients who thought if they painted the name of their businesses on their cars they could deduct 100% of their auto expenses. And then, they argued (might as well go for it) that they should be able to deduct the entire cost of their vehicles.

Sorry, that doesn't work. All you get is an advertising deduction for the cost of the paint and the labor of the auto artiste.

As for the auto expenses, including the depreciation on the car, you take a deduction based on the business use only. That's business mileage divided by total mileage. So, if you drove 10,000 miles during the year, 2,000 of which were for business, you get to deduct 20% of your auto expenses.

The body parts

The general rule is that there's no charitable contribution deduction where less than your entire interest in the property is contributed. There are exceptions. One is the contribution of an undivided portion of your entire interest in an asset. That could include, say, your 50% ownership share in a residence, a farm or a property that qualifies for conservation tax breaks.

But that hasn't stopped taxpayers from trying to take a deduction for donations of body parts. That just isn't going to work.

One woman who lost 200 pounds had her excess skin removed and actually donated it to a skin bank. The IRS couldn't wait to deny that deduction!

Pets

We all love our pets. But they really don't qualify as our dependents regardless of how much we spend on their upkeep.

Literally millions of dependents disappeared when the IRS demanded Social Security numbers for all claimed dependents.

That means that you not only lose the personal exemption for the pet, but the medical deduction for the veterinary bills as well. Sorry about that.

Well, if I can't claim them as dependents, perhaps I can get them to pay my tax bill with their charge cards. Both my dog and my cat have had Visa and MasterCard credit cards in their own names, sent by banks eager to add Frisco T.D. Schnepper and Fred T.C. Schnepper to their rolls. (T.D. is "the dog" and T.C. is "the cat.")

Busting the IRS

Just because a deduction is outrageous doesn't mean it's automatically disallowed.

In 1988, Cynthia Hess, a Green Bay, Wis., stripper known as "Chesty Love," claimed a $2,088 deduction for implants that enlarged her bust size. The IRS turned down her claim.

In 1994, however, Special Trial Judge Joan Seitz Pate ruled that the result of the implants increased Hess' income and allowed the deduction.

Updated Jan. 8, 2009

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