Each year, millions of Americans do their taxes and figure out what they owe Uncle Sam, or in some cases, what Uncle Sam owes them. Every tax payer is allowed certain standard deductions depending on their income level. Those who exceed their deductions are then assessed tax on their earnings. To offset this, many claim itemized deductions which can lower their taxable income and thereby the amount of tax they owe. Most itemized deductions fall into common categories, but occasionally you get some creative and strange claims for deductions. Some work, and some fail, here are just a few.
A gas station owner gave his customers free beer instead of trading stamps. He then claimed the cost of the beer as a business expense. Incredibly, upon review the Tax Courts found that this was a legitimate business expense and therefore tax deductible.
One business owner whose business was failing decided to hire an arsonist to burn his business down. The plan was to collect the $500,000 insurance on the business and then deduct the $10,000 expense of hiring the arsonist. Needless to say, this was not acceptable to the IRS, or the police for that matter.
Some smart junkyard owners bought pet food and placed it around the junkyard every night to attract wild cats. The idea was that the cats would then stick around and keep the rats and snakes under control making the junkyard safer for customers. It was decided that since the cats were providing a business service, the cost of the food could be deducted as a business expense.
Can you deduct the cost of moving your pet? The answer is yes if you are moving because of a job. Under these circumstances, your pet is considered a personal effect and any expenses incurred relating to any kind of move associated with a job are deductible.
Interesting to see what people try to get away with, and often do.