"Write Off" Starring Nicholas Cage

As we sit quietly awaiting the fate of poor Mr. Street in the Easter District of Pennsylvania, he of the belief that the Internal Revenue Code is unconstitutional, we now have the case of Nicholas Cage. The Internal Revenue Service alleges that Nicholas Cage used a company he owned to improperly deduct millions of dollars of personal expenses including amounts paid for limos, meals, gifts, travel and his Gulfstream jet.

The Internal Revenue Service disallowed those expenses and Nicholas Cage filed a Petition in the United States Tax Court contesting the disallowances that now create income for him at the personal level and his alleged alter-ego company, Saturn Productions is similarly contesting those disallowed expense deductions.  The Internal Revenue Service, in disallowing the expenses as improper because they were personal in nature re-characterized them as non-deductible which created a situation where they were then treated as income to the owner of the company, namely, Nicholas Cage. The net net is that Cage's company loses the deductions and Cage is charged with the income. This is actually a relatively simple case that hinges primarily upon the adequacy of the documentation maintained by Saturn and Cage to sustain the deductions. 

Mr. Cage....Mr. Snipes is home if you want to give him a call.

John Hanamirian