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Abusive Trust Tax Evasion Schemes - Law and Arguments (Section V)

V. Personal Expenses Are Generally Not Deductible

Personal expenses such as those for home maintenance, education, and personal travel are not deductible unless expressly authorized by the tax laws. (IRC § 262) The courts have consistently held that non-deductible personal expenses cannot be transformed into deductible expenses by the use of trusts. Furthermore, the costs of creating these trusts are not deductible. See Schulz v. Commissioner, 686 F.2d 490 (7th Cir. 1982); Neely v. United States, 775 F.2d 1092 (9th Cir. 1985); and Zmuda.


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Page Last Reviewed or Updated: 01-Apr-2014