Like most of us, Don Hughston doesn’t like to pay taxes. Unlike most of us, he did something about it: he kept every receipt and tried to legally write off as many expenses as he could as “business” expenses.
Some years ago, he said, he had a small apartment in Denver, a living room-kitchen combo, one bedroom, one bath. He said he slept on a futon in the living room.
His deductions were way outside the norm and the U.S. Internal Revenue Service was auditing his tax return again.
Don had claimed his bedroom as an “office” and, as a result, had written off a good portion of his rent and utilities.
“Where do you sleep?” the IRS tax examiner asked, and he obviously did not believe the answer — in the living room on a futon.
Because the tax examiner said, “OK, let’s go see,” or words to that effect. And they got in the taxman’s car and drove to Don’s apartment.
In the living room, just like Don said, the tax examiner found a futon and it looked like it had been slept on.
But the examiner would not give up.
“Where do you keep your clothes?” he asked.
“In the closet in the bedroom, but I didn’t claim that space as a business expense,” Don told him.
“How do you get to the closet to get your clothes.”
It was a tiny win for the IRS: The examiner disallowed the deduction for the pathway from the living room to the clothes closet.
Coming Monday: Hold Your Nose, Pat