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Uncomfortable with an aggressive accountant
A reader's accountant recommends big deductions - is he going too far?
By Jeanne Fleming, PH.D., and Leonard Schwarz

NEW YORK (Money) -- QUESTION: I am an eBay seller, and I work at home. In preparing my taxes, my accountant surprised me by suggesting I deduct as business expenses things like the newspaper and a portion of the cable bill.

He said the IRS generally allows these expenses, that the penalty is modest when they don't, and that, since I'm unlikely to get audited, "it's worth a try."

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Money Magazine's ethicists are consultants who advise attorneys on people's ethical beliefs. E-mail them at right_thing@moneymail.com.

He also said not to worry whether these things are directly related to my business - that everyone deducts them if they can. Can he be right?

ANSWER: Before we rush to judgment here - and before you do, as well - we suggest you ask your accountant to explain the underlying economic rationale for each expense that you're uneasy with.

There may be something you're overlooking with your eBay (Charts) business that makes these expenses legitimate. If so, it'd be a shame to miss out on their deductibility just because your accountant's "everyone does it" cynicism makes it sound as if you'd be cheating.

Whatever the outcome of that conversation, however, your accountant is dead wrong about one thing: ethically, the test for what you should and should not deduct has nothing to do with the odds of getting audited or with the magnitude of the penalty if the expenses are disallowed.

Sure, there may be items you choose not to deduct in the hope of forestalling the aggravation of an audit. But you should not let the low odds of being challenged encourage you to deduct expenses that have nothing to do with your business anymore than you would let the low odds of getting caught encourage you to surreptitiously piggyback on your neighbor's wi-fi.

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