Everybody likes a good, meaty tax deduction. But some people try just a little too hard. For instance, here are ten deductions that probably seemed like a really good idea at the time, but were not allowed by the IRS.
1. Buffalo meat
A man who worked as a professional bodybuilder wanted to deduct his expenses for protein shakes, posing oil and buffalo meat. He claimed that he needed the buffalo meat for his work because it is higher in protein than other meats.
The IRS allowed him to deduct oils for posing, and deduct tanning products, but did not allow the buffalo meat deduction. The meat, they said, is something that anyone might eat, so it was not specific enough to the bodybuilding profession.
2. Flowers and candy for secretaries
A lawyer wanted to deduct the expense of gifts for his secretaries, but the IRS said no because it was not necessary for the running of the business.
3. Emu feathers
A couple that raised chickens and emus would occasionally sell chicken eggs and emu feathers. The eggs were sold for $1 a dozen. On the basis that this was a business, they wanted to deduct the cost of feed and maintenance for the animals. The IRS said no because the couple didn't keep track of the income from the birds. It did not qualify as a "trade or business."
No, sex with prostitutes cannot be deducted as a medical expense. Nor can expenses for pornography. The U.S. Tax Court has ruled out prostitution fees as a deduction on the basis that they are illegal payments and so cannot be deducted. In the same case they ruled out pornography expenses as medical expenses because they were not prescribed by a doctor, nor meant to treat any specific medical condition.
A member of Rod Stewart's band wanted to deduct the expenses of all of his stage clothes, including his underwear. The deduction was allowed for the flashy outer items, but not for the underwear.
9. Nail polish remover
A tax preparer (!) tried to deduct milk, beer, underwear (here we go again), and nail polish remover as "supplies." IRS response: no.
6. Loofa sponges
A pilot wanted to deduct loofas...and a shower curtain...and sporting goods...and grass seeds. The tax court ruled (are you ready?) that these were not necessary for an aviation business.
7. An aquarium
A couple wanted to deduct a 75-gallon aquarium as a business expense. Seems plausible, if it was for the office waiting room. Turns out, though, that the husband was self-employed, so the aquarium, the new oven, and the re-covering of the sofa were not deductible as business expenses.
10. Scientology class
A salesman wanted to deduct a class from the Church of Scientology as a business expense because he claimed it was necessary for his career. The IRS said...it wasn't.
8. Sperm donation
A doctor wanted to deduct as medical expenses his costs for donating sperm. (Unexplained: why he had costs.) At any rate, the IRS said the donations were his choice, and were not done for any reasons related to medical treatment.
These deductions didn't work out, but Orange County tax attorneys are nonetheless grateful to these would-be tax deduction pioneers for trying. This way we can all find out what is definitely not deductible, and get a few good laughs at the same time.
Source: CNN Money "They tried to deduct what?!" 3/1/2011