My wife is a commercial airline pilot. She obsesses over tickets. I mean the bad kind of tickets sometimes called citations. This includes everything from speeding to parking tickets. She also loves to drive fast. She checks web sites for red light cameras. She generally drives just a little over the speed limit but not enough to get pulled over. She never mixes alcohol with driving. I even caught her checking our city’s parking regulation web site. She almost never gets a ticket.
I do the same thing for my clients and their tax returns. I pay careful focus to IRS areas of attention and expertise. An area the IRS loves to enforce is travel and entertainment deductions. I look at these areas as intersections with red light cameras. If you push the tax code you will get unwanted attention.
We Americans love our travel and entertainment deductions. Right next to that is our business use of our cars. These are areas which IRS Auditors are experts. Each year the rules change, but I’ll give you some classic examples. If I host an employee Christmas Party at a restaurant, only half of the cost is deductible. If I have the same party catered in the office, I can deduct the entire tab.
I accept a new client who was a dentist. As I studied his previous returns I noticed he deducted 75% of his automobile as a business expense. This is a hard one to defend as Dentists do not travel often. He may actually use his car exclusively for business, but he is also begging for an audit. This would be difficult to defend. Even if it were well documented.
My goal as a CPA and a tax professional is to create wealth. I do this in part by reducing tax liability. I also look at ways to increase income. Sometimes earning more income generates greater tax liability. The net result is more wealth. Not a bad problem.