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IRS doesn't like Herbstreit burning down his house.

Discussion in 'Sports and News' started by franticscribe, Jul 24, 2009.

  1. franticscribe

    franticscribe Well-Known Member

    Apparently Kirk Herbstreit had a Columbus-area home that he wanted to tear down to build on the lot. So, as was the practice in the area, he donated the house to the local fire department so they could burn it down in a training exercise. Then he deducted $330,000 from his taxes. Apparently the IRS didn't like that and made him pay $134,000 in back taxes and penalties. Now he's suing to get the money back.

    I'm blown away by the concept that you can get someone else to tear down your house to make way for a $1 million spread, and then expect to get a tax deduction.


  2. sg86

    sg86 Member

    He made a charitable donation and expected it to be written off.

    I'm not sure what's incredibly hard to believe about that.
  3. GoDeacs

    GoDeacs New Member

    "The donation -- and the deduction -- have been common for at least two decades for Upper Arlington residents who wanted to build new homes on property where old homes resided. Firefighters have used the old houses for training and burn-down exercises."

    And just to clarify, it's not that the "IRS doesn't like Herbstreit burning down his house," it's that it has chosen to discontinue allowance of that tax deduction. Apparently without notifying anyone first.

    Upper Arlington (which is very near the Ohio State campus) is a landlocked town. You can't buy land and build a house. You either buy a house on the market and live there, or you buy a house on the market, have it demolished and then rebuild on the land. I'm ambivalent about Herbstreit, but it seems as though he (and the Hendrixes) have a good case for getting their money back.
  4. pressmurphy

    pressmurphy Member

    If he was actually making a charitable donation, shouldn't the charity get something besides the opportunity to practice putting out a fire?

    In this context, donation would seem to imply also surrendering the land on which the house was situated.

    Otherwise it's just a sneaky way to save the $20K or $30K it would otherwise cost to tear down the house.

    This is one tax loophole that needed to be closed ASAP.
  5. Bamadog

    Bamadog Well-Known Member

    The donation of that house gives firefighters a brilliant training opportunity to practice on a live structure. They have facilities designed to simulate a house fire, but nothing beats the real thing.

    Continue the tax deduction. It's a great idea. And for the wealth envy crowd, grow up, please. Check your petty jealousy at the door, thank you.
  6. playthrough

    playthrough Moderator Staff Member

    Not so fast, my friend.
  7. Stoney

    Stoney Well-Known Member

    Well, I'm not sure the charitable deduction provision was meant to apply to acts where the payer doesn't actually lose anything.

    He wanted to remove the house anyways and it would've cost him a helluva lot more to do it himself. This shrewd little trick got the Fire Department to do the major part of it for him, no doubt SAVING him a lot of money and effort in the process. Takes a certain level of balls to then claim a $330,000 deduction for a "charitable" act that cost you nothing and saved you plenty.
  8. podunk press

    podunk press Active Member

    Sounds smarmy.
  9. Pancamo

    Pancamo Active Member

    Was the FD responsible for clearing site? Did Herbstreit incur costs above the donation amount?
  10. KP

    KP Active Member

    One hiccup is that the 330k was probably the assessed value of the house, of course when a house is assessed it also takes into effect how much land is owned. I'm going to guess the Herby's never gave up ownership of the land.
  11. KP

    KP Active Member

    Article says homeowner is responsible for clean up.
  12. Simon_Cowbell

    Simon_Cowbell Active Member

    Exactly... sneaky pile of bullshit
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