Businesses can often deduct all manner of legitimate security expenses, from gatekeepers and guards to closed-circuit TV and laser detection systems. But the IRS remains skeptical when man's best friend enters the picture, as one Texas CPA found out the hard way.
"We had a client who had rental properties and he always had quite a bit of security expense on the tax returns," the CPA recalls. "We did not realize it was a dog; we thought it was security systems that he had installed at each property. Evidently he would move this dog to different properties. In this guy's mind, the dog was providing the security that he needed on these properties."
Unfortunately, after deducting his mobile, four-legged security system for several years, the truth came out during an IRS audit.
"It turns out that his 'security expense' was his dog and all of the dog food and veterinarian expenses," the CPA says. "Even though the dog was technically providing security, it was not something the IRS allowed."