As April 15 approaches, perhaps a little levity (or relief) is in order, especially as taxpayers grapple with Uncle Sam over business write-offs. Here are five examples of wacky business deductions the IRS has allowed:

• Cat food. A junkyard owner was allowed to deduct the cost of cat food he bought for felines that kept his property safer for customers by reducing the rat and snake population.
• Moving Fido. Packing up to relocate for a new job? Don’t forget to include the cost of moving your pet to the new place, along with your other expenses. Sail through a couple of IRS questions and write off the dog, cat, parrot, etc.
• Meet me in Bermuda. Next time the boss is kicking around ideas for where to hold your next big meeting, suggest Bermuda. Point out that business conventions in Bermuda can be written off — without even offering a special purpose for holding it there. (Several other Caribbean nations qualify, as well.)
• Beer. You’ve all heard of customer loyalty programs that allow members to build up points, which can be turned in for free merchandise, for every item they purchase. Well, instead of giving away merchandise, a gas station owner opted to reward loyal customers with free beer after they’d purchased a set amount of gas. The Tax Court said it was a business expense.
• Fraud? No problem. A medical practitioner’s wife kept his books — and billed insurers for bogus services. When the law caught up with her, the doctor paid his insurance company to settle a civil claim for the ill-gotten funds. Since the payoff wasn’t punitive, the doc was allowed to write it off as a business expense. Icing on the cake: The loss generated by the deduction resulted in a refund of taxes paid in preceding years.

Source: “Extraordinary Tax Deductions,” by Peter Blank

Tags: Bermuda, business expense, Caribbean, customer loyalty programs, deductions, fraud, IRS, IRS questions, Tax Court, Taxpayers, Uncle Sam