Fix My Finances

If your are currently stressing out as you try and finish your taxes for Friday, take a break and read these humorous and strange tax deductions that Americans have tried to get away with:

My son, my dog
Disc jockeys typically don’t make much money and save even less. A few years ago, one approached Wyoming CPA Mike Lovelett for some free advice.

“I’ve got this problem, and I’m really starting to get nervous about it,” the DJ admitted. “Several years ago, I was going to owe some tax, so I put an extra deduction on my tax return.”

Well, reasoned Lovelett, managing director of Lovelett, Skogen & Assoc. in Casper, it couldn’t be that bad. Then the DJ explained: “I put my dog on as a dependent.” The radio personality had deducted his dog Red all these years, a move that meant he owed nothing to the IRS.

Sex and the city
Then there was the client who approached Manhattan CPA Marc Albaum about a very personal tax matter. “He had made some money being a sperm donor and wanted to know if he could take a depletion allowance,” Albaum recalls. “I told him he really needed to be an oil well or something like that.”

Playing with fire
Herb Wakeford, a CPA in Raleigh, N.C., recalls a Pittsburgh furniture-store owner who, after years of trying unsuccessfully to sell his business, hired an arsonist to torch the place. The insurance company paid off to the tune of $500,000, which the owner dutifully reported on his income tax return. However, along with taking the proper deductions for the building, its contents and the usual business expenses, he also deducted a $10,000 “consulting fee” he had paid the arsonist. An IRS audit two years later landed them both in jail. The IRS disallowed the “consulting fee” and slapped on $6,500 in additional taxes, penalties and interest.

See the rest of “The 9 Weirdest Tax Write-offs.”

Christy Patrick wrote this on April 11th, 2005 and filed it under Fix My Finances, Taxes |