By Michael Karlik | Colorado Politics
The federal appeals court based in Denver agreed on Monday that a Colorado attorney could not claim more than $300,000 in car racing expenditures as “ordinary and necessary” business expenses to be deducted from his taxes.
The Internal Revenue Service began looking into the tax filings and non-filings of James W. Avery between 2008 and 2013. Avery had been licensed to practice law in Colorado since the early 1980s and worked as a personal injury attorney, but he lived in Indiana from 2003 to 2010. Once there, he became interested in car shows and car racing.
During the tax proceedings, Avery said he affixed a decal for his law firm on the back of the car, which he considered “advertising.” He believed racing would enable him to meet lawyers or other clients. Ultimately, he only wound up having a consultation with one Pizza Hut franchisee as a result.