| Along with already mentioned "Buy, Borrow, Die" strategy is the more widely practiced "Expense everything" strategy which often ends in tax disaster for the practitioner. One of the early adopters was https://en.wikipedia.org/wiki/B._C._Forbes the founder of Forbes. He expensed lavish Gatsby style parties and everything. I remember reading a biography of his that one way in 1920s he accomplished was by having bought some big mostly useless plot of land and technically his lavish parties were sales presentations to sell this land. Occasionally some of his acquintances would actually buy a parcel of mostly useless land in middle of nowhere thus the business use was actually maintained. Again, highly unlikely to fly today with IRS and even then there were tax lawsuits. The issue is that it is impossibly hard to pull off without going into tax fraud territory. Another interesting case of "Expense everything" were ABBAs stage dresses and suits. They were purposely flashily impractical to avoid falling afoul of Swedish tax laws. That said tax authorities in most countries do allow some leeway for the small fish. Basically pragmatic tax authorities give you certain limits for certain expenses that you can expense. So in my European country you can expense a certain amount of gas, travel, clothing, eating out, etc as a self-employed. Yes you should have receipts, but if you stay within limits, it is up to you how honest you want to be about that "business" lunch. I remember it being it common in US too, someone takes you to lunch and you are supposed to mention their business and talk a few minutes about their business, then in their eyes it was a business expense. However, the moment you start going over these limits you will face increased scrutiny and you are in for a bad time for claiming as business expense lunch with your friends at Dorsia. |