Dog Training

[futurestrader39]

I work from home and a few months ago someone tried to break into our house while I was working. We've been going back and forth about sending out dog off for some training ( about $3,000 ) and since my business is ran from our house I was curious if she could be considered a guard dog and if the training would be able to be a write off? Obviously the training would have elements geared towards deterring any intruder. 

Thoughts? Am I crazy for thinking about this? 

[xmasbaby0]

Are you a W-2 employee?   If so, then job-related expenses are not deductible on your federal return.   Even if you are self-employed and prepare a Schedule C, sending your domestic pet for training to become a guard dog sounds pretty iffy as a business expense.  Someone else may have some thoughts on that.

@Critter-3   @DoninGA @Opus 17    ?????

[futurestrader39]

Business owner so 1099

[Opus 17]

@futurestrader39 

My general thinking when a business expense is also a personal expense, and I believe the IRS follows this thinking as well, is the “but for“ rule. But for the business requirement, would you incur the expense?  

You can see this rule operate most clearly in the case of a personal vehicle. You are allowed to deduct business mileage for a personal vehicle if you can substantiate that the mileage only occurred because of the business use (by means of a diary, mileage log or other records).   You can’t deduct the general expense of owning a vehicle, only the expense that occurred because of the business use.

The other rule is that business expenses must be ordinary and necessary.  Ordinary means usual and customary for that type of business, and necessary means necessary for the business to operate, but does not mean essential or indispensable.

So the first question is, is security an ordinary and necessary expense for the kind of business you run.  I suppose the answer to that question would be yes these days, for almost any kind of business.  Would it be an ordinary and necessary expense for you to hire a guard dog service to patrol your property at night?  If the answer to that is yes, then you have to look at the but for question to see if the expenses of your personal pet would also be covered.  What expenses do you incur only because of business use, that you would not incur for personal use.  (But for the business, you would not have this expense.)  Your dog needs food and a dog house and veterinary care even if there was no business purpose. But specific security training for the dog might be something that is only required because of the business.

So I think the answer is probably yes, but the purpose of this very long discussion is to give you the tools to understand how the IRS is going to approach the situation if you are audited. And each case depends on its own unique facts and circumstances.

[NCperson]

What is it the dog is protecting?  the business or the home.

is it material for the business? (steel, gold, machinery, etc.) 

is it the family well-being? 

if you are working from home are there other family members present? how is the dog protecting the business and NOT also protecting the family members

if you are working from home is a 'white collar' service role with there are no goods or material involved, what "business" is the dog protecting? 

[tagteam]

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@NCperson wrote:

if you are working from home is a 'white collar' service role with there are no goods or material involved, what "business" is the dog protecting? 

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I concur with the spirit of the above-quoted question 100% since, if audited, it is most likely the first question that will be asked. 

Noting that the username of the person who started this thread is "futurestrader39", I think it would be reasonable to assume that the "business" is securities/futures trading. If that is the case, then trying to take a tax deduction of $3,000 to train (what is likely) the family dog to guard against a home intruder would be ill-advised.

[Opus 17]

@NCperson 

@futurestrader39 

This of course implicates both the “ordinary and necessary“ and the “but for“ rules that I discussed above.  Although, even purely white-collar work could involve significant computer hardware and/or significant intellectual property, the theft of which could create a significant loss for the business even if it wasn’t monetizeable by the thief.

For example, if someone worked at home doing medical billing coding, and their computer was stolen, in addition to the monetary loss of the computer, the person might be subject to significant fines and compliance costs over the loss of patient’s personal information.

I certainly agree that the overall issue is first, is this an ordinary and necessary expense for this type of business, and second, is there an additional cost due to the business that is over and above what would be considered a personal expense.   

[tagteam]

This also, of course, implicates "common sense" in terms of the actual manner in which this expense would be deducted.

The only form to claim the deduction is on Schedule C (assuming this is a sole proprietorship) and the only line on that schedule for the deduction would be 27a (Other expenses). Unfortunately, that line requires a description of the expense in Part V and "Guard dog training" with an amount in the neighborhood of $3,000 would almost certainly raise a red flag.