Legal News

Drink, Drive, Crash . . . and Write Off the Damage

By Ashby Jones

“Drink, drive, crack up the car . . . and write off the damage on your tax return.”

That’s the we-couldn’t-write-it-any-better lead to a WSJ story today on the wacky adventures of one taxpayer who caught a break after he appealed a decision by the IRS. (Hat tip: Paul Caron’s TaxProf Blog.)

But in fact, it’s true. The U.S. Tax Court last week allowed the driver of a car to write off thousands of dollars of damage after he totalled it while under the influence. Click here for the opinion.

The WSJ story sets out the facts:

In 2005, the taxpayer, Justin M. Rohrs, had bought a 2006 Ford F-350 pickup truck for $40,210. Months later, he went to a gathering at a friend’s house. Expecting he would be drinking, he arranged for a ride to and from home. But after he got home he decided to drive to his parents’ house. En route, his truck slid off an embankment and rolled over. Rohrs was arrested for driving under the influence and was taken to the hospital.

His insurance company turned down a loss claim because of his arrest and DUI citation. Then the IRS turned down his claim for a $33,629 casualty loss deduction on his Form 1040. Rohrs took his case to Tax Court, which decided differently.

In a Dec. 10 opinion, the judge said that driving after drinking doesn’t, by itself, amount to willful negligence.

Instead, he wrote, the level of intoxication and the quality of the driving has to be taken into consideration. In the case of Rohrs, his blood-alcohol level was at 0.09%, just slightly over California’s legal limit of 0.08%.

The judge also applauded Rohrs for having arranged a ride home from the party.

In an earlier post, the TaxProf Caron said he found it hard to see how a court “in this day and age would treat someone driving under the influence of alcohol as not engaged in a ‘willful act or willful negligence’ under the tax code.”

As for the judge’s suggestion that Rohrs was “reasonably unaware” that he was doing something wrong, Caron says: “Really? When he had to be driven home from a party because he planned to and did get drunk? And then hops behind the wheel despite drinking at the party?”

Full post as published by Law Blog - WSJ.com on December 16, 2009 (boomark / email).