Can we talk frankly about “business” autos? I can’t be the only tax professional who cringes every time a client says they bought a new car for their business that they insist is only used for business purposes.

In the most recent instance in my own practice, a lawyer told me that he bought a new Mercedes G550 in 2024 – a vehicle with a $150,000 price tag. He said he chose the G class because it has a gross vehicle weight rating over 6,000 lbs., therefore he can claim 60% bonus depreciation for the vehicle ($150,000 x 60% = $90,000 expected deduction).

When I informed my client that 60% bonus depreciation is only available for vehicles that have 100% business use, he insisted that he only used the car to commute to and from the office, therefore, the vehicle is 100% business. When I informed him that commuting to and from work is a personal expense and not a business expense, I got the usual “what do you mean commuting to and from work isn’t a business expense?” I’ve only explained this issue to clients a bajillion times.

I know my client’s business and I knew right away that his business mileage, if any, was probably 5% at best. Of course, he also had the firm purchase the vehicle. So now I have to deal with a vehicle owned by the business with 5% business mileage (if I’m lucky) and I’m sure the firm’s credit card will include car payments, gas, maintenance, etc.

This is only one of many, many different variations of business auto issues I encounter on a regular basis that have caused me to pull all my hair out (there’s none left). Do you hate business autos as much as I do? What business auto issues make you want to smash glass? Let me know via e-mail at mikeg@spidell.com.

The IRS denied a religious organization tax-exempt status because it served its members ayahuasca while it was awaiting a religious exemption from the Drug Enforcement Agency (DEA).¹

Organizations that want to be classified as tax-exempt under §501(c)(3) have to demonstrate that their activities are legal and consistent with public policy. The organization in this case was a church whose members’ sincerely held beliefs involved the consumption of ayahuasca, a Schedule I controlled substance that contains DMT, which is a strong (and illegal) psychedelic drug.

Under the Controlled Substances Act (CSA), there is a specific process for religious exemptions that allow for the use of controlled substances. To obtain the exemption, a religious organization must apply through the DEA, or a federal court can also issue an exemption.

The Iowaska Church of Healing applied for both tax-exempt status and a DEA religious exemption from the CSA. However, while those applications were still pending, the church conducted Ayahuasca tea ceremonies for its members. The IRS denied the §501(c)(3) exemption because the church engaged in illegal activity without a CSA exemption. The church cited Gonzales v. O Centro Espirita Beneficente União do Vegetal,² claiming that case recognized the use of ayahuasca in religious ceremonies as an exercise of religion under the First Amendment. But the IRS countered, and the court agreed, that the church had misinterpreted O Centro to mean they could use ayahuasca without the CSA exemption. Rather, that case found that an organization does not have to apply for an exemption from the DEA before seeking relief in the courts.

The Environmental Protection Agency’s annual “Fix a Leak Week” is approaching: March 17 through 23, 2025. According to their website, household leaks nationwide waste almost 1 trillion gallons of water a year total. The website provides info on checking for various types of leaks, videos for how to fix simple leaks like leaky faucets, and other resources:

www.epa.gov/watersense/fix-leak-week

The USGS provides a drip calculator so you can get a sense of how much water is actually going to waste. They calculated the volume of one drip to be ¼ milliliter and you can see how that adds up at:

https://water.usgs.gov/edu/activity-drip.html

Okay, I have a confession to make. I have become one of the myriad of “golden agers” who have joined the pickleball craze. I was never one for team sports; they were always way too much pressure for me. But I could never resist a ping pong table, and there my inner competitive monster would always come out. Friends who had seen me at the ping pong table said I’d love pickleball and, no, it didn’t require nearly as much energy as tennis, so I thought, why not, “I’ll give it a try.” 

And that was the last mild-mannered phrase you have since heard me utter about pickleball.

Here are a few of the things I absolutely love about pickleball:

• You are constantly being yelled at to stay out of the kitchen;
• I’m nowhere near a computer;
• The majority of folks playing are my age or older;
• It’s a great way to meet people who are rarely going to have the time to ask you any tax questions; and
• Unlike golf, you can always find the ball after you hit it.

And now that I’ve become hooked, I highly recommend my fellow tax professionals to join in, especially during tax season. I know, you’re thinking I’m crazy, but hear me out.

First, pickleball scoring is significantly less complicated than calculating alternative minimum tax. When your brain is fried from determining whether your client’s crypto trades constitute a wash sale, there’s something refreshing about a scoring system that doesn’t require a master’s degree to understand. Plus, shouting “7-3-2!” is far more satisfying than working with balance sheets.

The “kitchen” rule in pickleball (where you can’t volley from the non-volley zone) is also oddly familiar to tax practitioners. Just as you wouldn’t dare step into the kitchen during a game, you know better than to step into certain tax positions without substantial authority. Both mistakes can result in painful penalties, though at least pickleball doesn’t involve IRS notices.

Consider the therapeutic benefits: Every dink shot is an opportunity to release the pent-up frustration of dealing with clients who bring their tax documents in a shoebox. Each serve becomes a symbolic launching of those passive activity loss limitations into the stratosphere. And nothing beats the stress relief of smashing a pickleball after spending hours on hold with the IRS.

Moreover, the social aspect of pickleball provides a much-needed escape from tax isolation. Instead of talking to your office plant about depreciation schedules, you can discuss them with fellow players who will quickly change the subject to literally anything else.

Remember: Tax season is temporary, but pickleball addiction is forever. Besides, the only audit you’ll face on the court is whether your serve was actually out. And unlike tax disputes, those can be settled with a friendly “do-over.”

From its humble beginnings trading for pennies to becoming legal tender in sovereign nations, from pizza purchases that made history to lost fortunes buried in landfills, Bitcoin has already had a journey that rivals the best Hollywood scripts.

Here are some fun facts about everyone’s favorite magical internet money.

Bitcoin factoids

Satoshi Nakamoto, Bitcoin’s creator, owns around 1 million bitcoins (worth billions of dollars) but has never moved or spent them.¹ The FBI became the holder of (at the time) the largest Bitcoin wallet in the world after seizing 144,000 bitcoins from the Silk Road marketplace in 2013.² However, Satoshi Nakamoto is the largest Bitcoin holder.

There’s a limited number of bitcoins that will ever exist — 21 million. However, due to lost wallets and passwords, the actual number of usable bitcoins is significantly lower. Some estimates suggest up to 20% of all bitcoins are permanently lost.

For example, James Howells accidentally threw away a hard drive containing 8,000 bitcoins in 2013.³ He repeatedly tried to get permission to excavate the Welsh landfill where it’s buried, even offering the local council a percentage of the recovered funds.

(Following a hearing, a High Court dismissed Howells’ claim for excavation in January 2025, ruling that it had no prospect of success.)

A few people have had QR codes of their Bitcoin wallet addresses tattooed on their bodies, allowing for quick transactions by scanning their skin.⁴

Bitcoin firsts, a timeline

The first Bitcoin whitepaper was published by Satoshi Nakamoto on October 31, 2008, titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” which describes the original plan and protocol for Bitcoin.

The first Bitcoin block (the Genesis block) was mined on January 3, 2009.

The first Bitcoin transaction occurred on January 12, 2009, when Satoshi Nakamoto sent 10 BTC to Hal Finney.

The first Bitcoin exchange, Bitcoin Market, was established in February 2010.

The first real-world Bitcoin transaction was on May 22, 2010 (also known as Bitcoin Pizza Day), when Laszlo Hanyecz paid 10,000 BTC for two Papa John’s pizzas (roughly $41 at the time, or $0.0041 per Bitcoin). The Bitcoin Pizza Index tracks how much that purchase would be worth in today’s Bitcoin: https://bitcoinpizzaindex.net/.

The first major company to accept Bitcoin payments was WordPress in November 2012.

The first Bitcoin ATM was installed at Waves Coffee Shop in Vancouver, Canada, on October 29, 2013. The first Bitcoin ATM in Europe was installed in Bratislava, Slovakia in December 2013. The first Bitcoin ATM installed in the United States went online on February 18, 2014, in a cigar bar in Albuquerque, New Mexico, but was removed 30 days later.

The first country to adopt Bitcoin as legal tender was El Salvador on September 7, 2021.

Tax season has officially kicked off and for many of us that means arriving at the office before the sun rises and leaving long after it sets. Working 12+ hours every day, six or seven days a week for three months straight is a hell of a grind. How do you get through it?

Here’s what works for me:

• Good snacks that change weekly (with a combination of healthy and some not-so-healthy);
• Mixed coffees and teas to break up the monotony of the same hot drinks;
• Keeping a good rice cooker in the kitchen so I can make a hot meal in an office environment;
• Keeping a pillow, blanket, and sleeping pad handy because there will inevitably be a couple of days where I just hit a wall and need to shut my eyes for an hour;
• Putting a weight machine in my spare office for a quick lunch-time workout (although, if I’m being honest, my consistency needs a lot of improvement); and
• Large-screen TV mounted in my office – When I’m alone at the end of the day, I’m kept company by my old friends, Netflix and Amazon Prime Video.

Lately, I’ve had a lot of tension in my neck, so I’m considering a massage chair. It’s depreciable, right?

Send your best tips (and massage chair recommendations if you have them) to mikeg@spidell.com.

Toward the end of 2024, a DOJ release floated across my desk: an individual in Seattle had been sentenced to 10 months in prison for failing to report as much as $6 million in income on his tax returns for 2016 through 2020.¹ Upon closer reading, I discovered this individual owned coffee carts in Seattle. I know Seattle loves its coffee… the world loves Seattle’s coffee.² But $6 million in income from coffee carts? The answer is yes, if they are bikini barista coffee carts, which these were.

Let us set aside the questionable (although apparently profitable) practice of selling coffee in a bikini in the winter in Seattle. The DOJ release also presents readers with a Helpful Comparison so we can wrap our pea brains around the magnitude of this fraud.

Not content to merely note that the coffee cart owner caused a tax loss of around $1.3 million, the prosecuting attorney offered that while the coffee cart owner had enriched himself from sales to his community, he felt “he did not need to pay his share of the costs that support that society. … For example, school lunches are provided by the United States Department of Agriculture’s Food and Nutrition Service. But for this prosecution, [his] tax fraud would have cost the government the equivalent of 462,000 school lunches.”

Oh, now I get it. Dollars mean nothing to me, but undercooked pizza and tater tots? How dare he.

In case you are still unclear as to what this all means, here are more Helpful Comparisons, using a standard 10 × 8 school lunch tray:³

• To circle the world with school lunch trays, you would need approximately 250 million trays.
• You could fit approximately 300,000 school lunch trays in an acre if stacked perfectly without any space between them.
• If you were to stack up 850,000 Styrofoam lunch trays that New York City schools used to throw away daily, the stack would be 8.5 times taller than the Empire State Building.
• Stacked end-to-end, it would take 2,178.5 school lunch trays to reach the height of the Emerald City’s CN Tower.

Which brings us back to Seattle, and bikini barista coffee carts, and a fraud worth the height of 212 CN Towers in school lunch trays. And he only got 10 months.

Already dreaming about a post-tax season European vacation? If you know you want to get away but can’t decide on the destination, there’s always the usual considerations: museums, architecture, gardens, a restaurant featured on Chef’s Table… beer taxes.

The Tax Foundation created a map of the beer taxes across Europe, with Finland being the highest at €0.597 per 330 mL bottle of beer. You can see the rest at:

https://taxfoundation.org/data/all/eu/beer-taxes-europe/

This is it: the final issue of Spidell’s 2024 Tax Season Tribune. Hopefully we have provided you with some levity during this filing season, and maybe a few new jokes to tell at parties. Don’t forget to follow us on LinkedIn, Facebook, and Instagram — you’ll get great information there, too.

We’ll continue to provide you with more analysis, seminars, and breaking tax news. Next Sunday, Spidell’s California Minute^® podcast returns for its ninth season, and Spidell’s Federal Tax Minute^® podcast will be back starting April 23.

The IRS is warning taxpayers of the inaccurate and misleading tax advice coming from social media, including TikTok among other sources. Before you roll your eyes at me, let me say up front that the IRS’s warning is less about Chinese disinformation and more about faux experts run amok.

Who would have thought that a group of people whose lives depend on “clicks” would provide anything but sound professional tax advice? To save you the time, I watched a TikTokker (wearing cut off jean shorts and a tank top) explain that all you have to do is start an LLC, and you can deduct all your cell phone, car, and other expenses against your other income — no actual business purposes needed. Why didn’t I think of that?!? Oh yeah, because it’s tax fraud, you dolt!

So, as I end my last Tribune article of this tax season, let’s raise a glass to TikTok tax influencers and artificial intelligence creators alike! They will give real professionals plenty of job security to last (… at least until I’m ready to retire).

Until next year!

In March 2023, the IRS issued new FAQs on their website addressing whether certain costs related to nutrition, wellness, and general health are classified as medical expenses under IRC §213.¹

The FAQs reminded individuals about the deductibility of expenses like smoking cessation programs, therapy, weight loss programs, and gym memberships.

However, it seems that people were taking the IRS’s advice too far because almost exactly a year later, the IRS issued an alert reminding taxpayers that personal expenses for general health and wellness are not considered medical expenses under the tax law.²

Specifically, general welfare expenses that are not specifically for the purpose of diagnosis, cure, mitigation, treatment, or prevention of disease are not deductible or reimbursable under health flexible spending arrangements, health savings accounts, health reimbursement arrangements, or medical savings accounts (FSAs, HSAs, HRAs, and MSAs).

The IRS noted that some companies were misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed under FSAs and other health spending plans. FSAs and other health spending plans that pay for, or reimburse, nonmedical expenses are not qualified plans. If the plan is not qualified, all payments made to taxpayers under the plan, even reimbursements for actual medical expenses, are includible in income.

We are excited to announce that in May, Spidell will begin to roll out a new look and feel for our brand! This includes a new logo and a fresh look for our marketing and subscription e-mails. But you can be sure that behind these visual upgrades, there will be the same high-quality tax analysis that you have come to trust and expect from Spidell.

Filing season can be hard on everyone, tax pros and taxpayers alike. But a recent poll by Cash App Taxes revealed that 25% of Gen Z taxpayers said they get so stressed during filing season, they need a therapist.¹ Further, 54% of that same group said that filing taxes has brought them to tears in past years or they expect it will this year.

This could open up a new advertising avenue for tax professionals: “No-More-Tears Tax Prep.”

(If Cash App Taxes sounds familiar to you, they were the ones involved in the logo dispute with H&R Block, which we covered in the March 5, 2023, issue of Spidell’s Tax Season Tribune.²)

AB 984 to the rescue

In an attempt to bolster the financial literacy of young people leaving high school, California’s AB 984 would require a one-semester course in economics that would include content in personal finance as a requirement to graduate.

According to the bill’s authors, “AB 984 guarantees access to a personal finance course to all high school students, instilling them with the skills and support they will need throughout their lives.” Problem solved.

Except the bill analysis admits that there have been numerous past attempts to mandate personal finance instruction in high school, but research into whether this instruction is actually effective has mixed results.³ Specifically:

“One author concludes that, ‘We have long noted with dismay that students who take a high school course in personal finance tend to do no better on our exam than those who do not. This finding has been a great disappointment to consumer educators and to those who support efforts to make courses in personal finance a requirement for high school graduation, and it points to the need for better materials and teacher training.’ (Mandell, 2006).”

Until personal finance finds its way into the curriculum, filing season might be a boon to therapists. And taxpayers will want to refer to the IRS’s FAQs to see whether those therapy costs are deductible medical expenses. But more on that next week.