Deducting $1 million in renovations on a 15k sqft second home - what could go wrong?

A lot. Witasick was an attorney who mostly served Arizona clients. He bought this 56 acre monster home and for two years renovated it - while deducting a majority of the costs as business expenses.

The Court called it fraud and he served jail time. We dig into repair and maintenance, business / personal use, and unreimbursed partner expenses.

S-Corps gone wild.

A taxpayer forms more S-Corps than he needs and loses out on millions of dollars in deductions from:

- S-Corp basis limitations

- Bad record keeping

- Missed tax elections

Buy here pay here car dealership, bad accounting record access, and an aggressive IRS agent all combine for a few million dollars in tax assessed.

But the good guys get a win in this case and Aboui gets major tax relief mostly from some IRS missteps.

We talk about:

- Cohan rule (what happens when accounting is bad)

- S-Corp taxation on distributions

- Types of audit techniques the IRS will use

On Episode 1, we get into 7 US Tax Court cases from 2024 with some solid lessons learned:

1. Parkway Gravel v. Commissioner - 3:07 - real estate options, C-Corps, partnership, related parties
2. Schnackel v. Commissioner - 16:09 - cheating husband, disallowed business deductions for cheater
3. Foradis (Warren) v. Commissioner - 28:15 - Real Estate Pro status blown up
4. Maggard v. Commissioner - 37:02 - S-Corp income allocation, embezzlement, Operating Agreement rant
5. Schwarz v. Commissioner - 49:09 - bad accounting, conglomerate of activities, losses disallowed as hobby
6. Huffman v. Commissioner - 1:01:17 - stock options subject to gift tax, personal goodwill as C-Corp play
7. Strom v. Commissioner - 1:12:06 - dot com bubble crash, $100MM W2, sham tax structuring