Here's the reality: They are lucky the daughter didn't put them into the high risk category of a lawsuit expecting this "business vehicle" to be backed by deep pockets. In other words, depending on if she caused property damage and/or bodily harm, even to herself, he could be sued for everything if he wants to continue to take the position this was business-related, including losing his business and any personal assets to a legal judgement. And it's his daughter that could be the plaintiff, even. Especially, it gets even worse if they keep claiming this was business-related and she was "doing the business" on that trip, because now you have worker comp considerations, as well.

I recommend they suck up personal loss and move on. The IRS really doesn't care about this sort of mess.