Drug Lab Burns Down
A man bought a building that was previously used by a religious sect. He decided to use the building as a drug lab. Unfortunately a hot plate ignited his chemicals and a fire burned down the building. Although the building (which was probably used for cooking meth,) had been used for an illegal activity, he claimed he was entitled to a $9,000 casualty loss. Even though he acted negligently and was using the building for an illegal drug lab, the Tax Court allowed him to take the write off.
Supporting Your Child’s Career
A father owned a successful real estate development company and his son was a motocross racer and a local celebrity. The father decided to sponsor his son’s racing activity and over the course of 2 years his business spent $160,000 in equipment and other costs. Tax Court allowed the father to deduct almost the entire amount as a business expense. Since the firm acquired new business, new connections and favorable deals the sponsorship was tax deductible.
Music Professor Plays the Bass
An accomplished musician and music professor attempted to deduct his travel expenses for jazz rehearsals and performances. His reasoning was that he needed to keep his skills sharp for performances with other well-known musicians. The IRS said he could not deduct these costs since performing wasn’t part of his teaching duties. But a Tax Court allowed the deductions because he used what he learned in the music scene to teach his students.
Lets Buy a Plane
A couple owned a rental condo about 6 hours away from their home, but instead of driving or taking the only commercial flight available to visit the condo, they bought their own plane. The Tax Court allowed them to deduct their condo-related trips – including cost of fuel and depreciation for the time the plane was used for business related purposes.
Cat Food
A couple who owned a junkyard were allowed to write off the cost of cat food. They would set the food out to attract wild cats. They needed the cats to get rid of snakes and rats in the junkyard, which made it safer for customers. Tax Court conceded that the cost of food was deductible.