Is the business advice of the chief rabbi tax deductible?

0
181

“Sholom,” his secretary called from the other room, “your accountant is on the phone. Something about the tax people refusing to deduct two items as legitimate business expenses: your three trips to Israel to get business advice from the chief rabbi, and your daughter’s wedding reception here in Montreal.”
Sholom looked up from the drawings of the latest lamp he had designed for his lamp company. He picked up his phone and spoke quietly into it. “Max, I may be a businessman but I’m also a religious man. I belong to a strict Hassidic sect. The government is not used to a businessman who is forbidden to lie. Hire a tax lawyer, Max. We will fight the government.”
In court, the prosecutor pleaded the case for the Minister of Revenue.
“Your honor, surely Sholom doesn’t have to go thousands of miles away to Israel for business advice. Surely, there was a religious wise man at home who could have given him advice. Those trips to Israel were holidays not a corporate expense.
“And what could be more personal than his daughter’s wedding reception? Even if there were some business contacts there, it’s not clear what part of the reception costs relate exclusively to business. Please throw out Sholom’s claim.”
Sholom got up to plead.
“Your honor, I know it’s hard for this court to understand, but important and successful Jewish businessmen who are members of the Belzer Hassidic community come from all over the world to seek the advice of the chief rabbi of Israel on major business decisions. What’s so surprising to pay $22,000 for the trips? It’s like paying $22,000 for consultation fees. Peanuts for a million dollar business.
“And my daughter’s wedding reception was also a business expense. I am kosher and religious. I cannot do the regular business entertaining that non-religious business people do at restaurants or baseball games. My daughter’s wedding provided a promotional event for all my clients and business contacts.
“After the wedding, I got a fantastic offer of $100,000 a year for a sole distributorship of our wonderful glow-in-the-dark lampshades. So you can see, the $12,000 I am claiming for the cost of the wedding reception – and just for the business people – was a legitimate business expense.”

Should Sholom’s trips to Israel and his daughter’s wedding be allowed as business expenses? YOU! BE THE JUDGE. Then look below for the court’s decision.
THE DECISION

“Sholom, yes to your wedding expenses, no to your trips to Israel,” decided the court.
“The wedding expenses involving business contacts are deductible. A clear decision was made to take advantage of a personal event and make it in part a business promotion.
“But you didn’t convince me about the Israel trips. Why couldn’t you get advice from a local Hassidic leader in Montreal? Now, it’s not for this court to second-guess the type of adviser you need. But detailed explanations are necessary when such an exceptional expense is made. And this court didn’t get those explanations.”

YOU! BE THE JUDGE is based on actual court cases.. Today’s decision is based on the facts of the case and the law of Canada. If you have a similar problem, please consult a lawyer in your province Elissa Bernstein is a lawyer and syndicated columnist. Copyright 2018 Haika Enterprises. B36-2