When Extramarital Affairs Run Afoul With Taxes

tax affairs

As a freelance writer for longer than I care to say, I’ve written thousands of articles for all kinds of print publications. The tally includes newspapers, magazines, and newsletters. Add to the tally hundreds more for electronic publications.

How many have appeared on AccountingWEB, which began to run my articles in April of 2014? Go to its archive, where you’ll find more than 250 and counting.

Odds are that more than a few visitors are going to notice that more than a few of the articles chronicle IRS successes and stumbles when the agency endeavors to exact taxes from women who receive currency, cars, clothing, dwellings, furs, gems and other valuables from men with whom they’re amorously involved.

Why are bureaucrats bedeviled? Because Congress wants them to enforce an Internal Revenue Code that stipulates disparate treatment for compensation and gifts. Whereas one provision says payments received as “compensation for services” are taxed, another one says money or other assets received as “gifts” aren’t taxed.

The key issue: Should these women be treated as recipients of taxable compensation or as recipients of nontaxable gifts? No surprise then that the courts often have to resolve these gift-versus-compensation clashes.

My favorite dispute, which I have written about in one of my books: One that pitted the IRS against Leigh Ann Conley and Lynnette Harris, twin sisters and Playboy magazine models. Both became mistresses of the same wealthy — and much older — widower, David Kritzik.

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About Julian Block

Julian Block

Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com


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