Tax Deductions You Won’t Believe Are Real

Tax season is in full swing and people are looking at their return and wondering about deductions they should include.  This month we are going to talk about tax deductions that are bit unusual but have been successfully deducted.   Some are a bit ridiculous and others are down right hilarious.  During such a stressful time, we wanted to provide some funny anecdotes.  

Free Beer, Anyone?

A service-station owner decided a good promotion for his business would be to offer his customers a free beer with a fill-up.   It is no surprise that gas sales increased considerably.  The Tax Court allowed the owner to deduct the cost of the beer as a business expense.  Looks like alcohol and gasoline do mix! 

Film Making

A lawyer had invested six years making a documentary film on a musical group.   The IRS tried to claim that the long series of annual losses indicated that this film was more of a hobby then a documentary film.  The judge reviewing the case attempted to suggest that documentary filmmaking is not-for-profit by nature.   This suggestion was so disturbing that several well-known filmmakers filed friend-of-court rulings saying that you can make money with documentaries. 

The court eventually ruled in her favor and allowed the deduction of the six-figure losses.  Furthermore it was noted that she acted in a businesslike manner – hiring staff including a bookkeeper, she bought insurance, consulted experts and even changed the story line in order to make the film more marketable, she also blogged about the film and submitted it to film festivals.

Babysitting Charges

According to the Tax Court, fees paid to a babysitter to enable a parent to get out of the house to do volunteer work for a charity are deductible as charitable contributions.

Landscaping Your Home

A sole proprietor who regularly met with clients in his home office was allowed to deduct part of the cost of landscaping the property.  Based on the fact that it was part of the home being used for business.  The Tax Court also allowed a deduction for part of the costs of lawn care and driveway repairs.

 New Pool

After a doctor told a man with emphysema to develop an exercise regimen, the man put a pool in his home.  He swam twice a day and improved his breathing capacity.  He swam in the pool more than anyone in his family.  The Tax Court allowed him to deduct the cost of the pool as a medical expense, because the main purpose of the pool was for medical care.  The cost of heating the pool, pool chemicals and a portion of insurance for the pool were are also treated as medical expenses.