Thursday, February 14, 2013

The Hobby Story

There's an interesting German legal piece in the Wiesbaden Kurier today....over taxes and 'hobbies'.

Out of the Munster area....there's this guy who ran a legal office, with several folks hired as lawyers for his company.  It's not clear if this was a major operation or just a small operation, but as profits went....this lawyer and his company had an interesting yearly event.

For a number of consecutive years....he ran with his team....on significant losses.  Bad luck?  Don't know....that was never laid out in this tax case.

The thing is....he claimed these losses (five and six figures) on his taxes each year.  If he had done this one year, then skipped a year, and done it again in the one would have noticed much or said anything.  But when he does for a number of years....always noting significant losses, the German tax folks just weren't going to accept that.  You can't be that screwed up (at least in their mind).

So the court came out with an interesting ruling, which is local in nature, and may be taken to the national court.  They said....he ran his legal operation as a 'hobby', not as an authentic office.  And in the area of hobbies, you can't claim losses (or profits for that matter).  There's no hint of the next step....but it might interest enough folks to have it checked at the national court level.

The judge noted at some point, that the guy never even wanted to clear a profit....he seemed more bound to note all the losses as part of this guy's tax scheme.

As an American, I'm always amazed by the twists and turns of the German legal system.  Course, I'm also amazed how a guy could run year after year....with losses...and still be in operation.  Frankly, if I knew he was this unsuccessful as a lawyer....I might not even want to hire the guy.

Just observations.

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