The Holy Grail Deduction

"I have a friend who has an income in the six-digit figures, but he does not pay any income tax. He has this "tax guy" who is a genius and knows about tax deductions that ordinary mortals do not know about!"

My answer: He is a liar. Period.

I feel very strongly about this kind of liar for three reasons:
  1. He causes my clients a lot of stress.
  2. He wastes my time because I have to undo the damage he did my client with his misleading deceptions.
  3. Instead of lying, I think he should join the rest of us to fight too-high and too-many taxes.

The reason I am so confident that he is without reservation a liar is that logically one or more of the following four statements is true:
  1. He fabricated the whole claim to impress his friends.
  2. He lied about not paying taxes. He may be stupid and therefore believes that he did not pay taxes because his accountant got him a refund. Maybe he actually paid in $25,000 during the year and got a $4,000 refund at the end of the year. He is too stupid to realize that he paid the $21,000 difference as tax.
  3. He lied to the government by reporting a loss of $10,000 when in fact he had a profit of $100,000.
  4. His accountant did in fact deduct legitimate-looking investments that are highly leveraged. Unless there is a sensible reason for these investments to exist, they are themselves a lie. These deductions range from highly questionable to downright illegal. The IRS has trouble tracking them down, but it tries to.
If you have a friend who is willing to make these claims, then I challenge you to do one of two things:
  1. Get a copy of his tax return and study it. No?
  2. Ask him to make an appointment for you with his "tax guy" and tell the "tax guy" in advance that you want that same deduction? No? Why not?

The Holy Grail Deduction
Many people secretly believe that there is one special deduction. If only one could find the book or magazine that told him what that deduction was! There simply is no such thing. The existence of the "Holy Grail Deduction" is about as real as:
  1. UFO's
  2. Nostradamus' having predicted the Kennedy assassination and 9-11
  3. human spontaneous combustion
  4. unicorns
One can believe these things, but the believer will never benefit or find tangible evidence of them.