Can I deduct the cost of a lease on my business taxes?

My last boss did it for two years in a row. He had a small lease where he let me and two other employees hunt. He took one client out there for one trip each year and said that qualified him for his write off.

Is it legal? I don't know.
Did he get audited? I don't know that either.

Depends on how you use it...some of it can be written off as promotions vs. Meals and Entertainment....both can be deducted, just at different %'s....i write of 50% of my lease for M&E.

DVM

Talk to your accountant because it really depends on the lease and the situation. It is generally a risky proposition taking a deduction like that. Especially one where personal and business expenses are intermingled.

DVM - As a vet, what would your business uses of a hunting lease be, continuing professional education?

Shoot em, then save em.

Sooner

I work on all kinds of whitetail breeding operations, hence it allows me to keep up with the industry trends. And i also take my attorney, bankers, contractor, and clients to the lease for PR, i actually donate a hunt to our local Chamber of Commerce every year that sells for well over 1K each year. So, like my Football tickets....i write a % of my entertainment off for business. My accountant seems to be Ok with some of it being legit for business...so i go with it.

DVM

Let's see. 2% of all returns get audited - therefore you have a 98% chance of not being audited. You can write off your entire lifes expenses if you want to. You only have to justify them if your lose the odds game and wind up in the 2% category - and very few Ags are 2 percenters. I say write it off.

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You can write off your entire lifes expenses if you want to.

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The 2% is not totally drawn at random...

I sent an email to an accountant asking this question and below is his response.

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I did not watch it all, I shut it off as it was a blowout in the making. I heard about Bobbie’s “short” comment. I love that guy. Unfortunately, in today’s politically correct environment, he is a dying breed.

As to writing off the deer lease, in general…

For entertainment costs to be written off, a substantial business discussion must occur either before or after. Obviously, this is not a hard test to meet.
However, expenses related to entertainment facilities (the regs have examples as yachts, hunting lodges and swimming pools) are not deductable under any circumstances. A hunting lease falls under the facility rule so none of the annual lease costs can be written off.

What can be written off (subject to the 50% limitation on M&E expenses) are the costs incurred in entertaining the client. E.g. meals, gas to the lease if he rode with you etc.

As a quick example, if you were to take a client to your lease and you rode together, you could write off the gas, food and drinks consumed (yours and his), and any ammo etc. you furnished to him (50%). As you can see, the cost of providing this would exceed any tax savings you got from the write off. On the web site, one guy said his boss had a lease, took one client out there once a year and wrote the entire year’s cost off. This is an easy audit adjustment for the IRS. This is tax fraud and the guy should go to jail. If more *******s like him were sent to jail for the frauds they commit, the tax laws would not have to be so complex nor would the rest of us have to pay the price through higher taxes and complex compliance rules. This jerk has no concept of tax law and knows that what he is doing is wrong but hope’s he will not get audited. As you may have guessed, I have zero sympathy for people like him.


See:
Harrigan Lumber Co., Inc. v. Commissioner

Docket No. 17730-84., 88 TC --, No. 88, 88 TC 1562, Filed June 23, 1987

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D4B...it seems you have trump card on this discussion and I need a new Accountant...yours wouldn't happen to be in the B/CS area?

No, he's actually a Partner at a Big 4 firm in Houston. Not the type you'd hire for personal tax reasons.

IMHO, it sounds like your accountant friend is in bed with the IRS and has a big stick up his a$$. The ridiculous tax code, which he refers to, is the exact reason people look for reasons to write stuff off.

And for the record, I don't have a lease.

[This message has been edited by Log (edited 1/17/2008 7:45p).]

Actually, it's because of that rediculous tax code that he gets paid as much as he does.

And I can't speak to his ass. Sorry.

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Actually, it's because of that rediculous tax code that he gets paid as much as he does.

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Soo... He's a Good Old Boy.

Yes, if you use it as a marketing , entertainment type of project. Thre are restirctions on the amount I believe. A 50% cap if I recall correctly.