Dr. Gary M. Schwarz and Marlee Schwarz overall lost in a recent Tax Court decision. It was a fascinating story. Dr. Schwarz, who had a very successful dental practice, also had a substantial amount of real estate. On some of the real estate, deer larger than usual for Texas roamed thanks to a fencing system that Dr. Schwarz had invented. This allowed for an ecotourism operation, which included hunting packages that generated a lot of revenue, but even more expenses. The silver lining of that cloud was the losses, characterized as farming, sheltered other income from dentistry and real estate.
Lessons Learned from the Tax Court: An Olive Branch in Tax Court
Matt Metras, EA
“Everything is deductible until the audit” is an adage frequently repeated in the tax preparation industry. Generally, it’s mentioned tongue-in-cheek, but today’s taxpayer (and her tax pro boyfriend) may have taken it a bit too literally. Additionally, cutting corners may seem like a time-saving strategy in the moment, but the potential to backfire can’t be ignored. In this case, the taxpayer is about to learn things the hard way.
