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Don’t get burned on a house donation

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in Small Business Tax

Q. My friend says you can deduct the value of your house if you allow the local fire department to burn it down. Is this possible? B.L., Columbus, Ohio

A. Possible, but not probable. Recently, some taxpayers have claimed charitable deductions by offering their dilapidated houses to local fire departments for “practice.” In theory, the deduction holds water. But the IRS has consistently nixed such deductions.

Because the house is already scheduled for demolition, donating it for training purposes isn’t an act of charity. Several cases on the issue are pending. If you take this approach, expect an uphill battle if you get audited.

Tip: An alternate theory might allow taxpayers to deduct clean-up expenses and other costs associated with the demolition. 

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