Tax Masters Patrick Cox on the Tonight Show with Jay Leno
Tax Masters Patrick Cox on the Tonight Show with Jay Leno
Monday night, April 11, seven days before American taxpayers are required to file a federal tax return or mail in an extension, Tax Masters Patrick Cox appeared on the Tonight Show with Jay Leno in a segment called “Go to the Expert.”
The sketch shows Tonight Show host Jay Leno proposing outlandish deductions taxpayers have tried to take over the years and asking the audience to vote by applause on whether the deduction is allowed, or not allowed. Leno then defers to Patrick Cox, the tax expert, to declare the expense deductible or not and then to explain his reasoning.
The sketch is segmented into two videos below. As always, your comments are welcome. And don’t forget to file your tax return or send in an extension this year by April 18.
The Tax Expert – Part 1
The Tax Expert – Part 2
Deductible or Not Deductible?
Scenario 1
Jay Leno: Man in Slippery Rock, Arkansas has emphysema. His doctor tells him he needs to get more exercise on a regular basis. Guy puts in a big swimming pool in his back yard. Come tax time, he writes off the pool; deducts the cost of the pool, calling it a necessary medica expense. Audience, how many think that is deductible? How many say not deductable? Let’s go to the man. Tax Master, what do you say?
Tax Master – Patrick Cox: That was deductible.
Jay Leno: All right, now why?
Tax Master – Patrick Cox: If it’s doctor’s orders, it’s legit.
Jay Leno: Really?
Tax Master – Patrick Cox: Absolutely. The chemicals, the cleaning, maintenance, everything.
Explanation
Capital expenses incurred for home improvements as a result of prescribed medical care are allowed expenses. From the IRS website:
- http://www.irs.gov/publications/p502/ar02.html#en_US_publink1000178902
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. - http://www.irs.gov/publications/p502/ar02.html#en_US_publink1000178851
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Scenario 2
Jay Leno: The madam of a brothel in Oklahoma, where prostitution is not legal, writes off $50,000 in sex toys, condoms, whips, chains, and everything used by her employees and her clients. She put these on her tax return. audience, how many think that is deductable? Wow, they know the law. How many say not deductable. It’s an illegal activity. Tax Master?
Tax Master – Patrick Cox: Jay, that one is deductable.
Jay Leno: Now wait, now why? She’s performing an illegal service. How can you deduct something like that?
Tax Master – Patrick Cox: As long as you report the income, the IRS can’t turn you over to the police even if your business is illegal.
Jay Leno: So what you’re saying is, they have no morals.
Tax Master – Patrick Cox: You said that, not me.
Jay Leno: Oh. Well. Put the ho in Oklahoma.
Explanation
All income is taxable income. Business-related expenses are allowed by the IRS and are enforced on a national basis. If adult-related items are deductable in Nevada as part of a legal business, they are also deductable in Oklahoma. It is not the job of the IRS to enforce local or state laws, but federal tax laws.
- http://www.irs.gov/compliance/enforcement/article/0,,id=112999,00.html
When no other crimes could be pinned to Al Capone, the Internal Revenue Service obtained a conviction for tax evasion. As the astonished Capone left the courthouse he said, “This is preposterous. You can’t tax illegal income!” But the fact is income from whatever source derived (legal or illegal) is taxable income.
About Tax Masters
Houston based Tax Masters has served tens of thousands of clients and had incredible success with helping taxpayers regain compliance with the IRS, settling federal tax debt, defending clients in audit, setting up monthly IRS payment plans, and filing past-due tax returns. The company is publicly traded under the stock symbol TAXS.
About Patrick Cox
Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation firms in the IRS tax relief industry. Before founding Tax Masters, Patrick Cox served as Vice President of Finance for Kemper Insurance Companies and owned a small CPA firm in Houston, Texas.