Monday, March 2, 2009


Sarah Lesher had a couple of appalling encounters with the IRS

She didn't adequately prepare before claiming her losses.

From 1976 to 1980, she was employed at Yale University as a research associate and a computer programmer. Eventually she learned about a publisher of travel guides that needed information for a revised edition of an African travel guide. Sarah got in contact with the publisher and received information regarding the submission of articles for the travel guide.

Sarah travel to Africa in October 1980 and then to Israel in January 1981. While in Israel, ostensibly to gather information for her writing activities, the Weizmann Institute employed her as a computer programmer. She bought a typewriter and wrote a draft of a fictional work based upon her adventures in Africa and Israel. However, she apparently didn't keep any type of business or accounting records of her writing activities. Nope, Sarah thought she could get by without making any debits or credits or keeping any other kind of financial or non-financial records.

As writers anxious to deduct our costs in writing and researching, we need to pay attention to Sarah's case as an example of how we might do things better than she did.

In September 1981, Sarah left Israel for Europe and their return to the United States at the end of November. During 1981 she incurred a total of $9,847.13 in expenses connected with her travels. She deducted it on her Schedule C of her Form 1040 for 1981. Once again in 1982, Sarah traveled to Africa, possibly for research and gathering material for the travel guide she had found out about earlier. She resumed working as a computer programmer there.

But apparently Sarah lacked experience writing any type of literary work prior to her trip. She hadn't published or sold anything and didn't sell or publish anything she wrote with respect to her travels by the time she got to the Tax Court trial. And by then she still hadn't engaged a literary agent to help her publish her work --- the Tax Court judge clearly didn't know how difficult it is to get a literary agent. It apparently didn't need one to publish its opinions on Sarah's cases.

Sarah didn't ever show the court that she had traveled to Africa, Israel, or Europe primarily to write, or that she had remained in Israel in 1981 to author literary works that could make her money. The court ended up saying that Sarah had used her fiction manuscript as a pretext to claim her travel as a tax deduction. Essentially, the court said that Sarah's fiction was a fiction.

Sarah actually introduced several hundred exhibits, including a copy of the draft of her novel. The submissions included correspondence and information concerning the accomplishments of her ancestors, her friends, and her acquaintances. It detailed her personal life, her activities for many years before and after the years in issue, and it even gave the backgrounds of various authors. Nonetheless, the court said Sarah had used her draft novel as window dressing to support her claims to deduct travel expenses.

1 comment:

  1. It's very amusing to stumble upon this summary of a very long and inappropriately written "brief" to the Tax Court, after line after line of Google listings of articles I have published since. Thank you for saving me the agony of digging out my original!

    The IRS still audits me regularly, but I now have detailed personal and automobile logs and receipts for virtually everything -- I believe I mislaid only one for a $10 item for last audit.

    But it runs in the family and has less to do with writing than with being self-employed. A sibling, in a completely different profession, was given a complete home-office audit by IRS. They found a $5 error.

    These audits are costing taxpayers untold $$, while the big guys go free. But I know enough about grassroots mobilization not to try to take to launch a campaign -- we have more serious government waste and poor use of resources at all levels -- if anyone can be motivated to try to even inform people about them, now that journalism, especially expensive investigative journalism, has fallen into a black hole.