Reducing Uncle Sam’s tax bite is a top priority for most Americans each year, and some taxpayers push the limits on deductions they try to claim. The trick, of course, is getting the Internal Revenue Service to accept you’re the deductions you present in April.
The key is to “keep excellent records of deductible items,” such as receipts from charitable donations or medical expenses, says Jackie Perlman, principal tax research analyst at the Tax Institute at H&R Block. Make sure there is precedent to back up your deduction, such as court cases and IRS rulings, she says. Otherwise, you could owe back taxes, interest and penalties if the deduction is denied.
Here are five unusual deductions that were approved by the IRS.
1. Breast implants.
An Indiana taxpayer who was also an exotic dancer included a $2,088 deductible business expense in her 1988 taxes for the depreciation of her breast implants. The dancer — known as “Tonda Marie” on stage — said she made $416 to $750 per week before the implants. At the urging of her booking agent, she enlarged her breasts to 56FF, with each implant weighing 10 pounds. She changed her stage name to “Chesty Love” and her fees almost doubled. She enlarged her breasts again to 56N with custom-made implants. After that surgery, she made more than $70,000 in a 20-week period from television and radio appearances.
The taxpayer said the implants were a necessary “stage prop” to increase her earnings and that she got no personal benefit from them. The implants had in fact caused several infections and strained her relationship with her family. The U.S. Tax Court agreed with her and ruled in her favor: “The implants under consideration here are not those usual breast implants that women seek to enhance their personal appearance … In contrast, petitioner's expenditures were detrimental to her health and contorted her body into a grotesque appearance, all for the purpose of making money.”
2. Cat food.
In 2001, taxpayers who owned a scrap yard on Hardscrabble Road in Columbia, S.C., deducted $300 for the cost of cat food as a business expense, among other unuusal deductions. The taxpayers used the food in the scrap yard to attract wild cats, hoping to deter snakes and rat. The IRS allowed the claim.
3. Organic foods.
In 1971, a Chicago couple deducted $3,086 as a medical expense for the increased cost of organic food. The taxpayers both suffered allergic reactions when they ate chemically contaminated food. The wife’s allergic reaction was so severe that she would lapse into an unconscious state and require hospitalization. The couple’s diagnosis and treatment to avoid chemically contaminated foods were confirmed by three separate doctors.
To comply with the special diet, the couple had to avoid eating foods “that have been artificially ripened, stored, sweetened, colored, and preserved, or foods that have been canned in phenol-lined tins,” according to the court documents. The couple purchased the organic food from special health food stores and paid about twice as much for organic food than regular, chemically treated food. As such, they deducted the difference in price between the two. The U.S. Tax Court allowed the medical deduction.
4. Bodybuilding oil.
From 1999 to 2001, a Wisconsin taxpayer deducted $13,726 for the cost of products that helped his bodybuilding career. The products included “ProTan Muscle Juice Professional Posing Oil,” which was applied before “pumping up backstage for optimum effects,” according to the directions. Another product, called Blow Out, was applied to the body five minutes before a workout. And a third product was massaged over the body hours before posing to provide a deep tan. Most of the products were sold primarily through advertisements in bodybuilding publications, rather than marketed to the general public. This last factor tipped the U.S. Tax Court in favor of the taxpayer. The deduction was allowed.
5. Boarding school.
In 1944, a taxpayer from Cleveland claimed a $1,996.05 medical deduction for his daughter’s boarding school tuition and transportation to the school in Tucson, Ariz. Five-year-old Genevieve suffered from a range of ailments including chronic bronchitis, sinusitis, asthma and anemia. Her parents, in consultation with her doctor, discussed putting her in a better climate for her health. She was enrolled in the kindergarten class at Arizona Sunshine School, which was described as a "Practical Outdoor School for Children of Particular Parents.”
The U.S. Tax Court noted that Genevieve’s condition did improve while in Arizona and ruled that $988.82 could be deducted for the cost of travel to the school, the school’s medical facilities, her meals and lodging. The Court said the tuition portion that covers education was not deductible as a medical expense because “the attendance at school appears to us to have been merely an additional activity, unrelated in any way to the cure or alleviation of the disease from which she was suffering.”