Deducting dog food--At a local dog show, one of the presenters said dog food is deductible! Is that a joke? We have two Labrador retrievers. Can we really write off their food, or is this a scam?
Some expenses are never deductible, others are always deductible, and some are deductible depending on the circumstances. Dogs fit into that last category.
Normally you can’t deduct the cost of owning a dog or other animal, but here are several situations when you can deduct the cost of a dog and its upkeep:
If a guide dog (or other service animal) is assisting a visually or hearing-impaired person or a physically disabled person, the cost of buying, training and maintaining the dog is a deductible, medical expense. This includes food for the dog.
A legitimate dog breeder can deduct the cost of breeding and selling dogs. But unless the breeding operation is run in a businesslike way, with the expectation of making a profit, the IRS will disallow these expenses as nondeductible hobby losses.
For five years, Ronald and Marcelle Larson ran a small dog-breeding business out of their home. They lavished extraordinary care on the dogs, because they wanted to produce superior, well-adjusted animals. The Larsons believed that breeding puppies in such an atmosphere would allow them to get higher sale prices for the dogs. But in five years of breeding Shetland sheepdogs, the Larsons never made a profit, and the IRS disallowed their deductions. On appeal, the Larsons convinced the Tax Court that the kennel was conducted in a businesslike way, there was an honest intention to make a profit, and they backed up their expenses with receipts. The Court ruled that the Larsons could deduct their expenses, including dog food, against the income they made from their other jobs.
If you provide services for dog owners, you may be able to deduct dog food and other costs as legitimate business expenses. Veterinarians and dog groomers occasionally need to feed dogs while caring for them. Kennels feed dogs as part of their service. And in a pet shop, until they are sold, animals are considered inventory. The retailer has to feed and care for the dogs, cats and other pets as part of the cost of doing business.
“Lassie,” the famous collie of movie and television fame, was a valuable business asset. In fact, there were several “Lassies” and they were used by the dogs’ owner to produce income. Housing, training, insuring these dogs, and breeding their replacements were all deductible business expenses. This included the salaries of several employees and, of course, the cost of dog food.
Dogs are often used in law enforcement work such as sniffing out drugs and bombs and assisting in crowd control. Some time ago, the IRS ruled that dog food allowances given to county law enforcement officers weren’t taxable. The dogs were owned by the county and used to perform various police functions. The dogs were trained to be accountable only to their handlers and lived with their officer handler. When asked for their opinion, the IRS said this was a legitimate business expense for the county and a nontaxable, working condition fringe benefit for the officers.
Dogs can also be used to provide security. If you use a guard dog to protect your business, the cost of dog ownership, including dog food, is a deductible business expense. Protecting your residence with a dog is not deductible.
If you can justify a guard dog to protect your business, call the dog a dog. Don’t misrepresent the dog as a “security system” or other pretense. If you are audited, disguising your deduction will weaken your case that the dog is justified.
Robin and Anne Jenkins deducted a security guard and some other creatively-labeled, personal expenses from their tax returns. The Jenkins’ “security guard” turned out to be the family dog. The deductions they claimed were for dog food and a license. The Tax Court denied their deductions and added a fraud penalty.
Pets are a personal, nondeductible expense. Deduct your pets and you’ll end up in the doghouse.
