Court lets drunken driver write off truck damage
The IRS rejected the casualty loss deduction of a drunken driver who wrecked his vehicle. But the man won an appeal to the Tax Court.
For one taxpayer, that scenario became a reality after he appealed a decision by the Internal Revenue Service.
The U.S. Tax Courtlast week allowed a man to write off thousands of dollars in damage after he totaled his pickup while driving drunk.
While it's not unusual to deduct property damage (this is claimed as a casualty loss deduction on Form 4684), the circumstances of the case -- which required a judge to decide if the driver was or wasn't willfully negligent -- set it apart.
It also shows that disgruntled taxpayers can challenge the IRS, and win, on some pretty odd cases.
The case also points up a tax code gap. While it turns on the idea of willful negligence, tax rules do not define what that means for casualty losses, according to Jay Starkman, an Atlanta certified public accountantand author of the book "The Sex of a Hippopotamus: A Unique History of Taxes and Accounting."
The outcome, says Starkman, "was unusual."
Court documents described the circumstances: In 2005, the taxpayer, Justin M. Rohrs, had bought a 2006 Ford-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 on drunken-driving charges and 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.
Tax Court cases
Driving after drinking doesn't amount to willful negligence in itself, the judge said in a Dec. 10 opinion. Instead, he wrote, the level of intoxication and the quality of the driving have 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.
Paul Caron, the associate dean of faculty and Charles Hartsock Professor of Law at the University of Cincinnati College of Law, 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?"
Established by Congress under Article I of the U.S. Constitution, the Tax Court is in Washington, D.C., and its judges travel around the country to conduct trials in various cities. The court is a place taxpayers can go when they think they have gotten a raw deal from the IRS.
Rohrs couldn't be reached for comment.
This article was reported by Arden Dale for The Wall Street Journal.
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