Here is one to add to my list of "tax oddities" - a taxpayer was allowed a casualty loss stemming from a car accident where he was legally drunk. The court noted that the taxpayer's alcohol level was only slightly over the legal limit! The IRS tried to deny the casualty loss deduction on the basis of wilful neglect and that a deduction would be contrary to public policy. The Tax Court did not agree.
I find this a bit shocking given how drunk driving is something that is against public policy - just look at state laws, public awareness campaigns and our society's mantra of having a designated driver when drinking outside of the home.
BUT, it seems that based on this case, a law change is needed. I recommend one that specifically says that losses and deductions related to violations of the law are not deductible. This would prevent having the government (that is, taxpayers) from subsidizing improper behavior. There are better things the government can do with these dollars.
For more on this case - go to the "Tax Oddities" website - look for "Casualty Loss Related to Drunk Driving."
What do you think?
Thursday, May 6, 2010
Tax Oddity - Casualty Loss Deduction Related to Drunk Driving
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