A couple of days ago I faced an IRS audit. They were examining my tax return for 2008. Because I have lost a lot of money at my business, there was a real risk that my business would be declared a hobby, thus costing me many thousands of dollars in disallowed deductions, or many thousands in tax court, take your pick. My business has lost money, but it is a real business ... and that point was made with the help of my dog.
I do deduct some of the expenses for my dog, Ginger. Ginger works 40-50 hours a week. She is a marketing tool, a model, a prop, and a security system, she's always on the job, and she works for kibble. Of course, I offered proof of all of this, including 3rd party witnesses, etc.
The interview with the IRS had been proceeding properly and professionally, and without overt hostility. But when I brought up Ginger, and showed her picture, the entire atmosphere of the interview changed. The agent went "oooh, she's beautiful." From that point it was problem solving, not "gotcha."
The specific moment the mood changed was when I showed Ginger's picture. Later, I asked my CPA what the turning point had been. He replied, "When you were talking about the dog."
We haven't gotten the formal audit report, but it was quite clear that the only problems were technical ones.
Meanwhile, Ginger gets a porterhouse, on me!
Gotta luv a good doggie. Kudos Ginger. Give her some extra kibble on me, Eric.
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