tax write off on watch?

[A Squared]

Jimntexas,


"If the pilot is paid on a W-2 then we both agree that there is no way to deduct the watch. You'd have to be able to show that your employer required you have this watch."

This differs from my understanding of deductions. I agree that a $4000 watch may be streching the definition a bit, but a work related expense does not have to be required by your employer in order for you to deduct it.

I don't have the Tax Code in fromt of me, but I do have a 2003 tax instruction booklet.
In the instructions for Schedule A Line 20 it says:

"Enter the ordinary and necessary job expenses for which you were not reimbursed. (Amounts your employer included in box 1 of your Form W-2 are not considered reimbursements)
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary "

Now, if you have case law that disallows watches for Doctors, that might also apply to pilots. That doesn't mean, however, that the only expenses you may deduct as an employee are ones specifically required by your employer.

 

[JimNtexas]

I was thinking of the employee's watch as being like clothing. You can't claim uniforms or work clothes as employee expenes unless they are required by the employer and not suitable for everyday wear. For example Tax court denied an employee business expense for a member of Rod Stewert's band for his loud and flashy clothing clothing, stating that they were suitable for personal use.

(aside: I do think that a big round airline pliot wheel hat is deductable as an employee business expense. No one would wear one of those if they were not forced to.)

Reviewing the rules for employee business expenses the only fig leaf I can find for you is if you want to call your $4000 watch a "small tool". I don't think that is what the IRS had in mind though.

I see no way that you could defend putting an item that costs thousands, lasts for years and might even appreciate down as an employee business expense.

It is different for schdule 'C' filers. Many of them invest tens of thousands of dollars in tools, so a $4000 capital expense for an "aviation chronometer" on a schdule 'C' is much less likely to inflame the IRS.

The argument I made to the court of my spouse was that our expensive watch is capital, a tool that last for years and therefore can and should be depreciated by self-employed pilots. Under the current seciton 179 rules you could then depreicate the watch in one year. Of course if you latter sell the watch you have a capital gain to report.

My wife's response to the whole concept of deducting your watch is to make hissing noises and mutter about mental problems of men with small sexual organs.

Edited to add: On reviewing the rules I find that you can depreciate captial expenses as employee business expenses for items that typically last over a year. In fact, the example given in the Ernst & Young guide is that of a goverment employee who was allow by tax court to depreciate part of his private aircraft which used for goverment travel and not fully reimbursed.

I can say with certainty that an employee claiming a 179 deduction as a schdule A expense is just begging for an audit.

 

[FN FAL]

4,000 dollar watches keep the geeks out of machine gun collecting.

I'll keep my 22 year old seiko and enjoy shooting a 4,600 dollar UZI instead.

In fact, with the UZI, I can deduct all the watches I want...from geeks like you.

 

[A Squared]

Reviewing the rules for employee business expenses the only fig leaf I can find for you is if you want to call your $4000 watch a "small tool".

Or as your wife suggests, the watch was purchased because of a small tool

How about "safety equipment", another of the specifically named deductible items? The watch has an ELT built into it.