It's tax season, which means people across the nation are wracking their brains to think of things to claim as business costs or medical expenses. Taxpayers looking for guidance in their own quests to maximize deductions would do well to check out our gallery, which includes both inspiring instances of successful savings and cautionary tales of IRS Icaruses who flew too close to the sun.
Breast Implant Write-Off? Outrageous Tax Deductions
Crazy Tax Deductions: Breast Implants, Swimming Pools and More
Up first is the case of exotic dancer Chesty Love, who in 1988, at the urging of her agent, "underwent multiple medical procedures to replace and to substantially enlarge her [breast] implants," according to TaxProf Blog. In a sense, the plan worked: Love's earnings almost doubled after the surgeries. But her bosom had become so large -- size 56FF -- that she suffered unspecified medical problems, as well as "considerable humiliation." According to a tax court opinion,
Petitioner was ridiculed by people on the street, her husband suffered off-color comments and insults, and she was ostracized by most of her family. Consequently, when her career as a professional exotic dancer is over, petitioner plans to have the implants permanently removed.
Since the expense of Love's plastic surgery was "incurred solely in the furtherance of the business engaged in" and "incurred in producing revenues to the business", the court found that she should indeed be allowed to depreciate the cost of her implants (Hess v. Commissioner, 1994).
The owners of a dairy business went on an African safari and tried to write the cost off as a business expense. They justified the deduction by saying that many of the dairy's promotional activities and marketing efforts included wild animals.
We're not sure that "wild dairy cows" exist, but the IRS agreed that the trip was "ordinary and necessary" and allowed the deduction.
A gas station owner who gave his customers free beer tried to write it off as a business expense.
He ended up in tax court, but the final ruling came down in his favor and upheld the deduction.
Interestingly, an Oklahoma businessman tried to deduct several cases of whiskey that he gave to his clients as "entertainment." That deduction, however, was flatly denied.
A Pittsburgh furniture store owner had tried to sell his business for years, but there weren't any takers. Frustrated by his lack of success, he hired someone to burn the store down. He collected $500,000 from the insurance company for his misguided effort.
Brazenly, the man went on to deduct the $10,000 that he paid the arsonist as a "consulting fee." An IRS audit two years later ended with both men in prison.
A doctor told his emphysema patient that the sick man needed to start exercising. The patient decided to install a swimming pool at his home, and then he deducted the cost as a "necessary medical expense."
The IRS agreed with the deduction -- not only for the pool, but also for the costs of the various chemicals, cleaning, heating and upkeep. No word on whether he could write off his suntan lotion.
While the IRS looks favorably upon swimming pools, it doesn't look as kindly on dancing.
Thinking that learning how to dance would improve her varicose veins, a taxpayer tried to deduct the cost of her dance lessons. The government cut in, declaring that the dancing was "not medically necessary."
There are about 75 million household dogs in the U.S. That means millions of pooches are left at home alone each day. To ease his pup's unhappiness, one taxpayer hired somebody to come to his home and watch his dog while he went off to work.
The IRS howled, however, when the taxpayer tried to deduct the cost by using a day-care tax credit intended for children and legal dependents. Pets do not qualify.
Some junkyard owners had finally had enough of a nasty snake and rat problem, so they cleverly set out bowls of pet food each night to attract wild felines. The cats not only ate the pet food, they also took care of the junkyard's unwanted guests.
Because the cats made the business safer for customers, the pet food was deductible as a business expense. Let's just call it a purr-fect solution.
Most real estate agents and brokers receive income in the form of commissions from sales transactions. You're generally not considered an employee under federal tax guidelines, but rather a self-employed sole proprietor, even if you're an agent or broker working for a real estate brokerage firm. This self-employed status allows you to deduct many of the expenses you incur in your real estate sales or property management activities. Careful record keeping and knowing your eligible write-offs are key to getting all of the tax deductions you're entitled to.
The Educator Expense Tax Deduction allows teachers and certain academic administrators to deduct a portion of the costs of technology, supplies, and certain training. Here’s what teachers need to know about taking the Educator Expense Deduction on their tax returns.
Have you been self-employed less than a year? If you’re just starting out, it’s possible you worked at a job earlier in the tax year before making the switch to self-employment, or you’re working multiple jobs. In this case, you may have more than once source of income you’ll need to report on your income tax return.
Heading off to college to broaden your horizons is exciting, but funding your education via scholarships? That's even better. Scholarships often provide a path to education that might not be feasible otherwise, which is why the Internal Revenue Service (IRS) can be generous in minimizing students' tax obligations. But sometimes scholarship money does count as income, and it’s better to find out now if your scholarship adds to your tax liability than to have a surprise later. Here’s how to decode your scholarship taxation.