In Uncategorized on 06/13/2018 at 17:14

Bookkeeping was never a strong point in the potters’ field. The potters herein referred to aren’t ceramicists, but suppliers of State-legal medical vegetation; the kind we never inhaled. Much business is done in cash, and Section 280E’s preclusion of deductions for expenses of trafficking in the green goddess requires creativity and a legal side business.

Well, Laurel Alterman and William A. Gibson, 2018 T. C. Memo. 83, filed 6/13/18, are up before Judge Morrison, who eviscerates Laurel’s bookkeeper and paid preparer both as to inventory and separation of items of expense between Federal legal and Federal illegal expenses. Laurel ran the show, but Bill dropped his innocent spousery, so they’re in it together.

IRS is super-generous with cost of goods sold (not a deduction but an adjustment to gross receipts; see my blogpost “Everybody Must Get Stoned,” 8/3/12), but all the deductions go by the boards, because Laurel can’t show what was for legal, and what for illegal, and anyway the two were too close together for Judge Morrison’s (and Tax Court precedents’) liking.

If Accounting for Potheads is a course you want to take, read Judge Morrison’s excursus.

But the side business deserves better than this.

“Besides marijuana paraphernalia, Alterman testified that the dispensary also sold (1) hats and T-shirts with the name and business logo of Altermeds, LLC, (2) magazines about marijuana, (3) and chicken soup.  No documentary evidence corroborates the existence or extent of these sales.  On a preponderance of evidence, we find that no such items were sold.  Furthermore, these types of products as described by Alterman would generally complement the sales of marijuana by the dispensary.  For example, the hats and T-shirts as described by Alterman bore the name and business logo of Altermeds, LLC.  Thus, even if Altermeds, LLC, sold such hats and T-shirts, selling those items would have helped advertise medical marijuana.” 2018 T. C. Memo. 83, at p. 27, footnote 18.

OK as to the hats and t-shirts, and the maryjane mags.

But chicken soup?

Who ever had the stoned munchies and went for chicken soup?

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