The Art of Deduction
April 6, 2011 § 1 Comment
A recent article on the Wall Street Journal’s website caught my eye. It was about a CPA by the name of Doug Stives, who left his job with an accounting firm to teach tax and accounting courses full-time at a business school in New Jersey. He then started a side consulting business, Doug Stives LLC. By maximizing his allocated expenses to his consulting business, Stives, though making 75% less than he was at his previous employment, is now taking home almost 90% as much. He is able travel more and is living a more enjoyable life. He says he “uses the tax code’s many quirks as the means through which he can live a fuller life.” What could be better than that? The key to Stive’s strategy is the Schedule C form, which is used to report profit or loss from a business. According to the article, ‘[o]n this form goes all of his income and expenses from his consulting work—advising clients, preparing returns, helping write textbooks and conducting continuing-education seminars that CPAs need to maintain their licenses.” Stives gets to choose where he takes his seminars and often picks vacation spots. By working half the time he is there (not counting travel days or weekends) he is able to deduct his entire airfare as well as a majority of travel costs as business expenses. There were many other deductions that Stives is able to take but the most interesting part is that he does it all by the book. He keeps accurate records, a separate credit card for business expenses, and is careful to observe IRS rules. I found this article to be inspiring and it really peaked my interest in getting the most out of your deductions.