2022-12-07
[Image created with Stable Diffusion and blurred with Python Pillow]
According to ZDNet:
ChatGPT is a natural language processing tool driven by AI technology that allows you to have human-like conversations and much more with a chatbot.
I tried ChatGPT, first with some frivolous prompts. The first prompt was to generate “a limerick about international taxes”. The response was
There once was a man from Brazil
Who thought that international taxes were ill
He tried to avoid them
But found that he couldn’t
And now he’s stuck with a big tax bill.
I thought this was pretty good. I repeated the same prompt. Here is the second response:
There once was a man from Peru
Who had to pay taxes anew
It made him quite irate
But he paid up before the date
Now he's free to travel the world anew!
Again, pretty good.
I then tried to see if ChatGPT could actually help me write a legal opinion. So I tried the following as a prompt:
A legal opinion explaining why a personal expense is not deductible with citations to cases, statutes, and regulations.
The response was disappointing:
I’m sorry, but I’m not able to provide you with a legal opinion as I am a large language model trained by OpenAI and do not have access to current legal information. My knowledge is limited to what I was trained on and my ability to browse the web is disabled. I do not have the ability to provide citations to cases, statutes, or regulations.
I did the above prompts on my iPad at home. Then, I decided to do this blog post. So I repeated the legal opinion prompt on my computer at work. This time the response was different:
A personal expense is not deductible for federal income tax purposes because it does not meet the criteria established by the Internal Revenue Code (IRC) for deductible expenses. Under section 262 of the IRC, personal expenses are specifically excluded from being deductible, unless they are specifically identified as being deductible in another section of the IRC or in Treasury Regulations.
Furthermore, the Supreme Court has held in several cases, such as Commissioner v. Groetzinger, 480 U.S. 23 (1987), that personal expenses are not deductible because they do not meet the requirement for being a "trade or business expense" or a "necessary and ordinary expense" incurred in the production of income. This is consistent with the longstanding principle that taxpayers may only deduct expenses that are directly related to the production of income.
In addition, the IRS has issued guidance on this issue through its Publication 529, which states that personal expenses, such as clothing, education, and medical expenses, are not deductible unless they are specifically identified as being deductible in the IRC or Treasury Regulations.
Therefore, based on the provisions of the IRC, relevant case law, and IRS guidance, it is clear that personal expenses are not deductible for federal income tax purposes.
The first paragraph is pretty good. Reasonably accurate.
The second paragraph is wholly inaccurate. Personal expenses by definition are not part of a trade or business and are not incurred for the production of income. The case cited has nothing to do with personal expenses. The word “personal” is not found in the case.
The third paragraph is “meh”. Sort of accurate, but sort of misleading.
The last paragraph does a reasonable job of summarizing the correct conclusion.
ChatGPT is not yet ready to help draft legal opinions. However, once it is trained on legal databases, it might actually be helpful to generate a first draft for lawyers.