Extraordinary Tax Deductions
Okay, admit it:
As you've struggled with your tax return, trying to come up with
some extra deductions to pump up your refund or reduce what you
owe, you've taken a few flights of fancy. "Can I claim a
deduction for all those blood donations at the Red Cross?"
"How about a charitable contribution for all the time I donate to
"Can I count the wedding gift for my boss's daughter as an
employee business expense?"
On the other hand, your fellow taxpayers have successfully
claimed write-offs for many things that most of us wouldn't even
imagine, ranging from cat food to a casualty loss for a vehicle
totaled by a drunk driver.
Here are 14 of our favorites.
Burning Down the House
A Breaking Bad wannabe purchased a building that had been used
by a religious sect and turned it into a drug lab. Unfortunately
for him, a hot plate ignited his volatile chemicals, and the
resulting fire gutted the building, rendering it unusable. He
claimed he was entitled to a $9,000 casualty loss. Even though he
was involved in an illegal activity and acted negligently, the
Tax Court allowed him to claim the write-off.
A man hired his live-in girlfriend to manage several of his
rental properties. Her duties included finding furniture,
overseeing repairs and running his personal household. The Tax
Court let him deduct as a business expense $2,500 of the $9,000
he paid her but disallowed the cost of her housekeeping chores as
nondeductible personal services.
An accomplished bass player and music professor laid a major
beatdown on the IRS. He traveled to jazz rehearsals and
performances to keep his skills sharp so he could play with other
well-known musicians. The IRS said he could not deduct his travel
costs because he enjoyed playing the bass and performing wasn't
part of his teaching duties. Nevertheless, the Tax Court allowed
him the write-off because he translated what he saw and heard in
the music scene and taught it to his students.
Rather than drive five to seven hours to check on their rental
condo or be tied to the only daily commercial flight available, a
couple bought their own plane. The Tax Court allowed them to
deduct their condo-related trips on the aircraft, including the
cost of fuel and depreciation for the portion of time used for
business-related purposes, even though these costs increased
their overall rental loss on the condo.
A couple who owned a junkyard were allowed to write off the
cost of cat food they set out to attract wild cats. The feral
felines did more than just eat. They also took care of snakes and
rats on the property, making the place safer for customers. When
the case reached the Tax Court, IRS lawyers conceded that the
cost was deductible.
Cat Food, Part II
A woman used her own money to care for feral cats that she
fostered in her home for a charity that specialized in the
neutering of wild cats. She spent more than $12,000 of her own
money paying for vet bills, food and other items.
The Tax Court ruled that she can claim a charitable deduction
for her expenses, but limited her write-off because she didn't
meet the substantiation rules, failing to procure a
contemporaneous written acknowledgment from the charity each time
she spent $250 or more on the charity's behest. With the proper
documentation, she could have deducted all the costs she incurred
for the organization.
A pro bodybuilder used body oil to make his muscles glisten in
the lights during his competitions. The Tax Court ruled that he
could deduct the cost of the oil as a business expense. Lest it
be seen as a softie, though, the court nixed deductions for
buffalo meat and special vitamin supplements to enhance strength
and muscle development.
In an effort to get bigger tips, an exotic dancer with the
stage name "Chesty Love" decided to get implants to make her a
size 56-FF. The IRS challenged her deduction, saying the
operation was cosmetic surgery. But a Tax Court judge allowed
this taxpayer to claim a depreciation deduction for her new, um,
assets, equating them to a stage prop. Alas, the operation later
proved to be a problem for Ms. Love. She tripped, rupturing one
of her implants. That caused a severe infection, and the implants
had to be removed.
Payments for Wrongdoing
An insurance company sued two doctors for insurance fraud. The
doctors admitted liability and agreed to reimburse the insurer
for the losses it sustained, and the insurance company agreed to
release a claim for restitution in a pending criminal case. The
IRS ruled that the repayments are deductible provided that the
doctors originally included the money in their incomes in prior
years. But to demonstrate that crime doesn't fully pay, the IRS
said the repaid funds are a miscellaneous itemized deduction
that's allowed only to the extent it exceeds 2% of the doctors'
adjusted gross incomes.
Wrecking the Car While Drunk
A reveler drank too much at a party and had the good sense to
arrange a ride home. A few hours later, after slowing down in his
revelry, he thought he was okay to drive. Unfortunately, the
vehicle he was operating slid off the road and rolled over. The
cops arrested him for drunken driving because his blood alcohol
reading was just over the legal limit. His insurer refused to pay
for the damage to his car because of the arrest. Yet the Tax
Court let him deduct the cost of the damage as casualty loss
because it said that he had tried to act reasonably. Had he
driven straight home from the party with a high blood alcohol
level and had the accident, the court declared that it would have
nixed his deduction because his actions would have constituted
In a novel promotion, a service-station owner gave his
customers free beer as a promotion. Proving that alcohol and
gasoline do mix--for tax purposes--the Tax Court allowed the
write-off as a business expense.
A lawyer faced a challenge from the IRS as she sought to
deduct losses during the six years she spent making a documentary
film on the musical group Up With People. The IRS claimed the
long series of annual losses indicated that her filmmaking
activities were a hobby, asserting the project was essentially a
high-cost home movie because her husband once was a member of
Furthermore, at one point during hearings, the judge reviewing
the case suggested that documentary filmmaking is by nature
not-for-profit--a musing that so alarmed the film industry that a
number of well-known filmmakers filed friend-of-court rulings to
say, in essence, that you can make money with documentaries.
Ultimately, the court ruled in her favor, allowing her
deduction of six-figure losses. It noted that she acted in a
businesslike manner, hiring staff such as a bookkeeper, buying
insurance, consulting experts, changing the story line to make
the film more marketable, blogging about it, and taking it on
tour to movie festivals.
Fees paid to a sitter to enable a parent to get out of the
house and do volunteer work for a charity are deductible as
charitable contributions even though the money didn't go directly
to the charity, according to the Tax Court. The court expressly
rejected a contrary IRS revenue ruling.
A sole proprietor who regularly met clients in his home office
was allowed to deduct part of the costs of landscaping the
property, on the grounds that it was a part of the home being
used for business, according to the Tax Court. The court also
allowed a deduction for part of the costs of lawn care and
A taxpayer with emphysema put in a pool after his doctor told
him to develop an exercise regime. He swam in it twice a day and
improved his breathing capacity. Turns out he swam in the pool
more than his family did. The Tax Court allowed him to deduct the
cost of the pool (to the extent the cost exceeded the amount it
added to the value of the property) as a medical expense because
its primary purpose was for medical care. Also, the cost of
heating the pool, pool chemicals and a proportionate part of
insuring the pool area are treated as medical expenses.
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