Unusual tax deductions

Dear Bonnie:  I’m the publisher of a food magazine and am getting married soon to a woman who is also involved in the food and entertainment industry. Almost everyone attending the wedding and reception are also in the food biz. We’re going to have a special “Wedding Food” table set up and there will be a theme that will be used in a contest I’m promoting through the magazine, called “Food brought us together.” Are there any write offs I can use on my tax return from my food-themed wedding?

– Clark, New York

Dear Clark: Hah! Who do you think you are, Kim Kardashian?

Okay, seriously now. The answer is that the IRS looks at intent. A wedding, by its very nature, is of personal intent. And you can’t write off personal expenses; it doesn’t matter how many of the wedding guests are clients or business acquaintances. In fact, you can’t even write off a party just because the guest list is comprised of potential clients and business associates. There must be a substantial business discussion before, during, or after the party.

But back to your wedding. Your mention of a contest that will be featured in your magazine got my attention. And you have a good point. And as I’m wont to do, I picture myself in front of an auditor defending your expenses and I think we would win if you are very careful in putting together only the expenses associated with the contest. After all, you cannot write off the entire wedding.

Don’t attempt to deduct any costs not associated with the food project, for example, wedding portraits of bride and groom or the fee paid to the minister. However, some of the photography, decorations, and the cost of the Food Table would be deductible; and the fact that it would all be documented in the magazine would add impetus to the claim.

Make sure that you keep a copy of the magazine in which your wedding pictures are used as well as the receipts to substantiate your claim. This is an aggressive position but certainly not one that is out of line. After all, you would have had to hire photographers, create a food table and incur certain other expenses to promote the contest.

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. For example, residing in Sonoma are plenty of business owners in the wine industry. You can bet that the cost of wine and food are valid business expenses as long as all the other rules are followed.

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? Think in terms of whether or not you would have incurred the expense if you didn’t have the business. The IRS allows business owners to deduct all “ordinary and necessary” business expenses. When you look at it that way, you might realize that there are plenty of deductions that you may have been overlooking.  Thanks for writing. – Bonnie