The U.S. Tax Court ruled last week that a driver could write off the loss of a car that he totaled during a drunk driving incident. According to reports, the driver in this case had a BAC of .09. In Oregon, that BAC would be considered intoxicated per se because it is over the presumptive limit of .08.
Although the case took place in another jurisdiction, the same presumptive limit applied there. Most people recognize that .09 is not a particularly high BAC. The tax court ruling is interesting, however, because the driver was per se intoxicated. Even so he was able to deduct the loss of his vehicle.
The tax court ruling hinged the mental state, what lawyers call mens rea. Losses are not deductable if the taxpayer had a mens rea of willful negligence. The judge in this case ruled that that driver was not willfully negligent by driving with a BAC of .09. In Oregon criminal law, driving under the influence of intoxicants is a strict liability crime. This means the government does not need to prove a mental state. The government must simply show that someone drove while intoxicated.
As a DUI lawyer, it has been many years since I have thought seriously about federal tax law. I do like this kind of cross over case though. The fact that DUI cases end up influencing other areas of law is one of the aspects that makes DUI practice so exciting. One should talk to an experienced tax professional about the nuances of any tax decision, although I doubt this recent tax court decision will encourage anyone to drink and drive.
