Sunday, April 10, 2011
Outrageous Tax Deductions The IRS Might Actually Allow
It's that time of year again…the tax payer vs. the IRS. The "rules" of the tax game say the tax payer looks for every possible deduction to lessen the tax burden while the IRS tries to close every loophole in order to garner as much income as possible.
And to that end, some of the tax payer team members try to bend those rules a little too far with an occasional surprising result.
Dairy Cows…on a Safari?
The owners of a dairy tried to write off an African safari as a business expense claiming that some of the dairy's promotional efforts included wild animals. Even though the concept of "wild dairy cows" is a bit far-fetched, the IRS actually allowed the deduction.
Beer vs. Whiskey…
A gas station owner gave his customers free beer and took the cost as a tax deduction. An Oklahoma businessman tried to deduct several cases of whiskey he gave to clients as an entertainment expense. After a trip to tax court, it was ruled that the beer deduction was allowed but the whiskey deduction was denied. Logical? Not even close.
Burning Down The House…
A Pittsburgh furniture store owner had tried for years to sell his business without any success. Finally in desperation he hired an arsonist to burn it down and collected $500,000 from his insurance company. But then he took the $10,000 he paid the arsonist and deducted it as a "consulting fee." An IRS audit two years later uncovered the crime and both men went to prison.
Thanks, Doc! Come By For A Swim Anytime…
An emphysema patient was told by his doctor that he needed to start exercising. So, the patient installed a swimming pool at his home and deducted it as a "necessary medical expense." Surprisingly, the IRS allowed the deduction including the cost of various chemicals, cleaning, heating and upkeep.
Did She Tango Her Way Home?
While the IRS said okay to the swimming pool deduction, they denied a deduction for dance lessons a tax payer claimed would improve her varicose veins. The reason? "Not medically necessary." That also covered dance lessons for arthritis and nervous disorders.
No, You Can't Deduct Fido's Babysitting
With approximately 75 million household dogs in the U.S., millions of them are left home alone each day. One tax payer hired someone to come to his house and watch his dog while he was at work then tried to deduct the expense using the tax credit intended for children and legal dependents. The IRS said "no way."
Junkyard owners had a nasty snake and rat problem. In an attempt to combat it, they set out bowls of pet food each night to attract the feral cats that roamed the area. The cats ate the pet food and also the snakes and rats. Since the cats made the business safer for customers and employees, the IRS allowed the deduction for the pet food.
And finally…the best for last.
The Bigger The Better?
An exotic dancer wrote off the cost of breast implants, claiming it was a business expense since bigger breasts equaled bigger tips. The IRS agreed, saying the implants were a stage prop essential to her act.