Cinco de Mayo—What and Why?

Cinco de Mayo literally translates to fifth of May and commemorates the Mexican army's 1862 victory over France at the Battle of Puebla during the Franco-Mexican War of 1861-1867. Although a relatively minor holiday in Mexico, in the United States Cinco de Mayo has evolved into a celebration of Mexican culture and heritage, particularly in areas with large Mexican-American populations. Cinco de Mayo traditions include parades, mariachi music performances, and street festivals in cities and towns across Mexico and the United States. As s longtime resident of Southern California, I've definitely seen many Cinco de Mayo celebrations.

Here's a brief history of Mexico's Cinco de Mayo holiday:

Mexico, formerly known as New Spain, declared their independence from Spain on September 16, 1810.  After fighting an 11 year war, they finally achieved their independence in 1821.

In 1861 [at the time of the U.S. Civil War], Benito Juarez became president of Mexico, a country in financial ruin.  He was forced to default on Mexico's debts to several European governments. In response, France, Britain, and Spain sent naval forces to Veracruz to demand payment of the loans. Britain and Spain negotiated a settlement with Mexico and withdrew.  France, ruled by Napoleon III, decided to use the opportunity to create a dependent French holding in Mexican territory. Late in 1861, a large well-armed French fleet landed at Veracruz and drove President Juarez and his government into retreat.

Certain of a swift French victory, 6000 French troops set out to attack Puebla de Los Angeles [not to be confused with Los Angeles, California, as California had been a state in the U.S. for eleven years at that time]. From his new headquarters in northern Mexico, Juarez rounded up a rag-tag force of loyal men and sent them to Puebla. Led by Texas-born General Zaragoza, the 2000 Mexicans fortified the town and prepared for the French assault. On the fifth of May, 1862, the French commander moved his well-provisioned army, supported by heavy artillery, into position at the city of Puebla and began their assault from the north. The battle lasted from daybreak to early evening, and when the French finally retreated they had lost nearly 500 soldiers to the fewer than 100 Mexicans killed.

Although not a major strategic victory in the overall war against the French, Zaragoza's victory at Puebla reinforced Mexican resistance, and six years later France withdrew from Mexico. The same year, Austrian Archduke Ferdinand Maximilian, who had been installed as emperor of Mexico by Napoleon III in 1864, was captured and executed by Juarez' forces. Puebla de Los Angeles, the site of Zaragoza's historic victory, was renamed Puebla de Zaragoza in honor of the general. Today, the anniversary of the Battle of Puebla is celebrated in Mexico as Cinco de Mayo, a national holiday.

Earth Day—Where, When, And Why

Saturday, April 22, 2017, is Earth Day. We only have one planet and we need to do everything we can to save it.

Supposedly originated in 1969 at a UNESCO conference in San Francisco, the name and idea for Earth Day was first observed on March 21, 1970—the first day of spring in the Northern Hemisphere. This day in celebration of the Earth was put into a proclamation signed by UN Secretary U Thant.

And at about the same time, a separate Earth Day was founded in the United States as an environmental teach-in first observed on April 22, 1970.  The April 22^nd date was taken international in 1990 with organized events focusing on environmental issues in 141 nations.

The impetus for an Earth Day came following the huge oil spill in 1969 off the coast of Santa Barbara, California.  Originally a teach-in on environmental issues to be observed on every college campus in the United States.  The name Earth Day was a logical and obvious suggestion made by several people in the fall of 1969.

The April 22, 1970, Earth Day was the beginning of the modern environmental movement.  Media coverage of the first April 22 Earth Day included Walter Cronkite's narration of a CBS News Special Report Earth Day: A Question Of Survival.

Earth Day became a popular event in the United States and soon around the world as well.  Earth Day seemed to work because of a grassroots level enthusiasm that quickly spread.

In 1990, on the 20^th anniversary of Earth Day in the United States, the observation officially went global in 141 countries.  The status of environmental issues now had stronger marketing tools, greater access to television and radio, and multimillion-dollar budgets.

Earth Day 2000 marked the first time the movement used the internet as its principle means of organization both locally and internationally.

Today Earth Day continues to grow in membership, number of countries participating, and the scope of its effectiveness.

We only have one planet. We need to do everything we can to save it.

The Last Czar

With Russia being in the news so much for the last few months, I thought the contents of this article I came across about a year and a half ago might be of interest.

The article told about the Russian government's desire to reunite the remains of their last imperial family in one place—the czar, czarina, and their five children. However, the mission was not without roadblocks, namely the need to satisfy skeptics about the validity of all the remains.

On September 23, 2015, Russian investigators exhumed the body of Czar Nicholas Romanov II and his wife, Alexandra, as part of an investigation into the family's death in 1918. It's part of the ongoing attempt to confirm the remains really belong to Nicholas, Alexandra, and their children. Some of the family's remains were tested in the early 1990s (the early days of DNA testing) with the results being that the scientists were pretty confident that it's really them. The remains exhumed at that time included the czar, his wife, three of their children and several servants. Two of the children, Alexei and Maria, were unaccounted for at that time. But…the officials weren't able to convince the Russian Orthodox Church about the authenticity of the remains.

The church officials have not come out with their exact reasons for doubt. There had been some discussion about the Romanov family having been canonized in 2000 which made the remains holy relics which required a different way of treating them. In general, church leaders say they just aren't convinced. The church's approval is important for bringing the family's remains together.

The church did, somewhat reluctantly, allow the family's remains to be interred in the Peter and Paul Cathedral in St. Petersburg where most of Russia's other czars are buried. But the church still had not accepted the family's identities in spite of the fact that several rounds of DNA testing had occurred.

In 2007 another burial site was located containing the remains of a young man and a young woman. More DNA testing confirmed they were Alexei and Maria. Those remains, however, were left sitting on a shelf because the Russian Orthodox Church balked at the idea of adding them to the family tomb. The church says it believes the family's remains were destroyed and won't change their position until they are 100 percent sure in spite of the DNA confirmation.

In February 2016 the church once again blocked the reuniting of the remains. Currently, the most prevalent explanation is that the church hierarchy wants to avoid the decision because either choice would alienate key factions. Rejecting the bones will anger some Orthodox adherents, particularly those outside Russia, while accepting them will incense a conservative domestic faction that believes the Soviet government somehow faked the original burial at the time they died and those aren't the real remains of Czar Nicholas II and his family.

And the entire effort remains in limbo.

Crazy Tax Deductions—Part 2 of 2

Here are some more zany tax deductions that didn't work…and some equally zany ones that did.  And a few deductions where the CPA preparing the taxes offered an opinion before the taxpayer filed the forms.

Here's some that were rejected by the IRS.

1)  Burning Down The Business:

A furniture store owner had unsuccessfully tried for years to sell his business.  He finally hired an arsonist and collected $500,000 in insurance money.  But things went bad for him when he tried to deduct the $10,000 he paid the arsonist as a "consulting fee."  Both men ended up in prison.

2)  Did She Tango Her Way Home:

A taxpayer was denied a deduction for dance lessons which she claimed would improve her varicose veins.  The reason for the rejection?  The IRS claimed the lessons were not medically necessary, the ruling also extending to dance lessons for arthritis and nervous disorders.

3)  Fido's Babysitting:

Millions of household dogs in the U.S. are left home alone each day.  One taxpayer hired someone to come to his house and watch his dog while he was at work then he tried to deduct the expense using the same rules intended for children and legal dependents.  The IRS said 'no way.'

4)  Beer vs. Whiskey:

Here's one that got a thumbs up and a thumbs down.

A gas station owner gave his customers free beer and took the cost as a tax deduction.  On the other hand, a businessman tried to deduct several cases of whiskey he gave to clients as an entertainment expense.  Tax Court ruled that the beer deduction was allowed but the whiskey deduction was denied.  [Makes no sense to me, or anyone else for that matter other than the Tax Court judge who made the ruling]

And here are some surprise rulings in favor of the taxpayer.

5)  Dairy Cows On Safari:

The owners of a dairy farm tried to write off an African safari as a business expense claiming that some of the dairy's promotional efforts included wild animals.  Even though the concept of 'wild dairy cows' is a bit far-fetched, the IRS actually allowed the deduction.

6)  Come By For A Swim:

An emphysema patient was told by his doctor that he needed to start exercising.  So, the patient installed a swimming pool at his home and deducted it as a 'necessary medical expense.'  Even though they turned down the deduction for the tango lessons, the IRS allowed the swimming pool deduction including the cost of various chemicals, cleaning, heating and upkeep.

7)  Here, Kitty-Kitty-Kitty:

Junkyard owners had a nasty snake and rat problem.  In an attempt to combat it, they set out bowls of pet food each night to attract the feral cats that roamed the area.  The cats ate the pet food and also the snakes and rats.  Since the cats made the business safer for customers and employees, the IRS allowed the deduction for the pet food.

8)  The Bigger…The Better:

An exotic dancer wrote off the cost of breast implants, claiming it was a business expense since bigger breasts equaled bigger tips.  The IRS agreed, saying the implants were a stage prop essential to her act.

And finally, some strange deductions the tax preparer ruled on before the taxpayer filed the forms with the IRS.

9)  Carrier Pigeons:

A tax payer was so distrustful of technology that he wouldn't use a computer or even a phone.  So, he used carrier pigeons to communicate with his business partner across town.  He also thought it made sense to deduct all his expenses for the care, feeding, and housing of the carrier pigeons as a business expense.  After determining that the businessman had not used technology for communication in the past, the CPA preparing his taxes decided the deduction was fair.  No word yet on whether the IRS agreed.

10)  A Baby:

A businesswoman tried to deduct the cost of her own baby as a business expense.  She used photos of the baby in marketing materials for her business and believed the money she spent on her baby's food, clothing, nanny, diapers and baby powder—a total of about $26,000 for the year—should all count as business expenses.  The CPA doing her taxes wrote off the cost of hiring the photographer who took the photos of the baby as well as the baby's stroller and clothing items that carried the company logo which pictured the baby, but she informed her client that the rest of the expenses were not allowed.

11)  Hip Replacement For A Dog:

A woman dropped off her tax information to her tax preparer.  He noticed an unusually high amount for medical expenses including $8,000 for a 'family dependent' even though she had no spouse or children.  The family dependent turned out to be her dog.  Because the animal wasn't a medical necessity for the taxpayer, he couldn't let her deduct the cost of the surgery or any of the dog's other expenses.

12)  Pole Dancing Lessons:

A man tried to write off the cost of his wife's pole dancing lessons as a business expense under 'meals and entertainment.'  The man claimed watching her dance was his after work relaxation and made him better at his job.  His tax preparer informed him that the IRS would swiftly deny the $800 deduction.

13)  $1,000 Worth Of Evian Water:

A very wealthy woman convinced her doctor to give her a prescription for three bottles of Evian water (specifying the brand) every day and declared $1,095 as a medical deduction on her taxes for the water.  Her CPA said that since she still had the prescription note in her files showing it had been prescribed by a doctor it was a permissible expense even though the doctor's note didn't disclose what her medical condition was that required three bottles of Evian water every day.

14)  Spanx Shapewear:

A real estate agent who was 'a little bit big on the bottom' (according to her tax preparer) bought several pairs of the Spanx brand slimming underwear because she thought looking smaller would help her sell more houses.  Her tax preparer told her there was no proof the Spanx had any impact on her business or income, therefore, it couldn't be considered a legitimate business expense.

15)  Recreational Drugs:

One financial planner had a rock band client actually try to deduct an item labeled 'drugs' as a Travel & Entertainment expense.  The total cost of the 'drugs' was in the high five-figures.  The band's bookkeeper claimed the cost of recreational drugs was necessary and ordinary.  Setting aside the fact that possession of the recreational drugs was illegal, the tax preparer advised the band that the IRS would never allow the deduction.

And on that note…Happy Tax Day to everyone!

Crazy Tax Deductions That Didn't Work—Part 1 of 2

It's that time of year again…at least here in the U.S.  Income tax is due!

Each year tax payers have tried to take the craziest deductions and have even pursued the matter in tax court when the IRS denied the deductions.  Here are ten of the zanier deduction attempts.

1)  Overdone Overdrafts:

A couple trying to keep their dry-cleaning businesses from going under had been denied business loans by their bank who had judged them to be a bad credit risk.  They came up with a plan to ease their cash flow problems.  They regularly overdrew their bank account and would pay the overdraft when the bank called.  This ended up costing them more than $30,000 a year in overdraft charges which they deducted from their taxes as a business expense.  The Tax Court denied the write-off, stating that the charges were unreasonably high.

2)  Red Blood Cell Depletion Allowance:

Because of her rare blood type, a woman made more than $7,000 in one year as a blood plasma donor.  She tried to offset the additional income through a tax deduction, claiming a depletion for the loss of both her blood's mineral content and her blood's ability to regenerate.  Depletion is a proper write-off for firms that remove deposits of minerals such as coal and iron ore from the ground.  The Tax Court ruled that individuals cannot claim depletion on their bodies.

3)  Prostitutes And Porn:

A tax lawyer spent more than $65,000 a year on prostitutes and pornographic materials which he deducted as a medical expense.  He stated the positive health effects of sex therapy.  The Tax Court denied the write-off saying his conduct was illegal and also wasn't the treatment for a medical condition.

4)  Burning Down The House:

A man relocated his family to a new state after a job transfer.  His wife didn't like the new location and returned home with the kids.  He visited over a holiday weekend and discovered another man had been living with her.  They argued and she left the house at which time he put some of her clothes on the stove and set them on fire.  It got out of control and burned the house down.  He claimed a casualty loss deduction and the Tax Court denied it saying they could not allow him to deduct a loss from a fire he set.

5)  Hush Money:

A pro football player got into an altercation with a lady friend at the time that he was in the process of negotiating a contract extension.  She filed a criminal complaint against him.  The team owner said if the matter became public, they would cut or trade him.  He agreed to pay her $25,000 to keep things quiet and he got his four-year contract extension.  When he tried to take the payout as a tax deduction, the Tax Court said the payment was a result of a personal relationship rather than a business expense.

6)  Designer Clothes:

The manager of a designer label boutique was required to purchase and wear the designer's clothing as a condition of her job to project the image of an exclusive life style.  A court denied her deduction because the clothes could be worn outside work regardless of the fact that they were not her personal taste of clothing. [Several decades ago when Dinah Shore had her weekly variety show, she deducted several gowns she had worn on her show as a business expense. The IRS claimed they weren't business as she could wear them to social functions having nothing to do with her television show. Her counter argument was that they were not useable for anything else as she could not even sit down in them. The IRS had her put on each of the gowns and prove that she couldn't sit down. She couldn't sit in them and the IRA relented.]

7)  Las Vegas Gambling Junket:

A repo company sponsored a bus trip to Las Vegas in an effort to drum up business from banks.  The people talked informally about the collection business, but everyone spent most of the weekend gambling and no formal meetings were scheduled.  The trip was very successful and the repo company got a lot more business from the attendees.  However, the Tax Court denied them the deduction of the cost of the junket because the business discussions were only a small part of the trip.

8)  Meals With Colleagues:

A partner in a law firm met every day with his colleagues at lunch to discuss the firm's business.  Unfortunately, the IRS denied the deduction for the meals as being a business expense.  The law firm took it to Tax Court where the court agreed with the IRS that the meals were a non-deductible personal expense.

9)  Wrecking A Rental Car:

Heavy fog had an airline employee stranded who needed to get to New Orleans.  He worked out a deal with a rental car company to take one of their cars that they needed driven to New Orleans.  The company would have the car transported without having to pay a driver and he would get to New Orleans with no charge for the rental car.  Unfortunately, he wrecked the car in Mississippi and had to pay for damages.  When he tried to deduct the payment as a casualty loss, the Tax Court denied the deduction because he wasn't the owner of the car.

10)  Shoddy Construction:

A couple paid a builder to construct their home.  Shortly after they moved in, they found a series of problems with the house that made living there impossible.  They deducted a large theft loss on their taxes, claiming the builder defrauded them.  The Tax Court denied it stating they were the victims of poor workmanship rather than fraud.

Next week in Part 2, I'll be sharing some more strange deductions that didn't work along with some equally weird deductions that the IRS did accept.