Most outrageous business deductions ever filed
Travel and entertainment expenses are as beloved as they are behated.
You get a bunch of free stuff … but it’s usually because you’ve been sent to some dismal rustopolis that ends in “burg” or “dong."
You eat, drink and travel more expensively than you might normally … but you’d rather just have the money instead.
And if you’re a salesman, it’s practically your job to spend hundreds, if not thousands, a month on prospective clients, making expenses-paid nights out a soul-forfeiting routine.
So taking liberties with an expense report is not only understandable, it’s practically a duty. After all, you’ve got to spend money to make money.
We canvassed business travelers and professionals who’ve done just that; some out of necessity, some out of the spirit of innovation.
Following are some of the most extravagant, superfluous, indefensible expenses ever filed with an accounting department.
Editor's note: The accountants, auditors and business travelers quoted below shared their stories only on condition of anonymity.
Total cost: US$150,000
Explanation: Global group tour of competing companies to determine best practices.
Real explanation: In 2007, two consultants hatched a plan to show their clients -- a board of eight Fortune 100 executives -- the world on the company dime.
Selling to their superiors a story about competitive research, they instead turned the trip into a company-funded vacation by simply changing all of the destinations on their itinerary from places like Guangdong and Houston to Vegas and Hawaii -- with the change penalties expensed, too, naturally.
When the companies they were supposed to visit called to inquire why they hadn’t met as scheduled -- and the expenses came in at three times what was estimated -- the party was over and all involved were fired.
Total costs: Several hundred thousand dollars
Explanation: Charitable giving.
Real explanation: When you have a customer whose boss's kid is having trouble getting into the college of his choice, that's a business opportunity.
Several years ago, one such scion of a Chinese CEO unsuccessfully sought admission to a top-25 university in the northeastern United States.
A software sales rep looking to drum up business in China arranged for the admission of the CEO’s son by donating on behalf of his company to the university, reaching the donor level necessary to set up a scholarship ... and to decide whose education that scholarship should fund.
Conveniently, the CEO’s son was the perfect candidate.
Total costs: US$500
Explanation: A room service-related mishap resulted in irreversible mattress damage.
Real explanation: During the NFL’s Super Bowl week in 2012, a publishing executive returned to his Indianapolis hotel room after entertaining a column of clients at a high-profile party thrown by his publication.
Having consumed an excessive amount of alcohol, the exec woke up the following morning to the realization that he had completely lost control of his bowels during the night, rendering the mattress unsalvageable.
After having paid to replace it among his other room incidentals, he had his assistant submit the expense to his accounting department under the line item “soiled mattress.” His attempts at reimbursement were denied.
Total costs: US$10,000
Explanation: Routine meals at fine dining establishments.
Real explanation: Today’s lean economy has hit those at the lower end of the hierarchy hardest, making per diems a secondary revenue stream.
So it’s not uncommon to see younger sales guys or consultants of modest compensation eating at Subway and other similarly cheap supping troughs.
But when it comes time to submit an expense report, these five-dollar gullet stuffings become $50 dinners at some of the finest restaurants in town. These young professionals are dumpster diving, digging through trash cans for receipts far in excess of the expenses they incur.
In one year, a salesman turned in approximately US$10,000 worth of meal receipts on just US$3,000 of actual expenses, pocketing the difference.
Total costs: US$400
Explanation: Millionaire musicians are too cheap to buy their own video game consoles.
Real explanation: An event producer booked a 10-times-plus platinum hip-hop artist to perform a set at a party in Vegas he was organizing in 2009.
Included on the rapper’s hospitality rider of required items was an Xbox video game system for use backstage before and/or after the show.
Ordinarily this kind of item would be rented, but the producer submitted a request for purchase. When accounting questioned him on why he wasn’t renting, he explained that performers usually end up taking home such items and giving them to their friends.
Accounting relented and, sure enough, the rapper walked off with the X-Box.
Total costs: US$6,000
Explanation: Needed a new wardrobe after leaving luggage in flight attendant’s hotel room.
Real explanation: That’s really it. On a flight from New York to Zurich In 2007, a director for a leading investment bank had a number of cocktails during the eight-hour ride and, having hit it off with one of the flight attendants, ended up going straight back to her hotel room.
The next morning, upon arrival at his own hotel, he realized that he left his suitcase at her's.
His boss loved the story so much that he signed off on a pricey new set of clothes. The banking director and flight attendant are still Facebook friends.