In 2004, Kirk Herbstreit -- the Ohio State quarterback turned ESPN analyst -- bought a home in Columbus, then allowed it to be burned to the ground. Sounds strange, until you hear the details: He and his wife wanted to build a new place on the lot, the local fire department wanted to burn down a house to give firefighters some intense but safe training, and Herbstreit had been told the IRS would consider the whole thing a tax-deductable charitable donation.
Everyone wins, right? Not quite.
No, it turns out that the IRS disagreed with Herbstreit's assessment of whether he could write the whole thing off, and that left Herbstreit with a big, fat tax bill. He ended up paying $134,606 in back taxes and interest, but now he's suing the IRS, saying he deserves to get that money back.
Columbus lawyer Terry Grady, who is representing the Herbstreits in the matter, says the Herbstreits made the donation under the impression that they'd get the tax deduction, and it's not fair for the IRS to tell them they can't have the deduction after their home has already burned down.
"People have been led to believe (the practice) is sanctioned by the IRS," Grady told the Columbus Dispatch.
Herbstreit and his wife wouldn't comment, and neither would the IRS, other than to say it takes such instances on a case-by-case basis. But it sounds like Herbstreit either got some bad advice froman accountant, or he got a bad deal from the federal government.
Hat tip: Fang's Bites.
Kirk Herbstreit Sues IRS
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7/23/2009 12:45 PM ET By Michael David Smith
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Read the article carefully.
"Herbstreit had been told the IRS would consider the whole thing a tax-deductable charitable donation"
"...the Herbstreits made the donation under the impression that they'd get the tax deduction.."
Nowhere does it say the IRS told Herby anything. Nowhere does it say Herbstreit spoke to the IRS.
Seems to me the guy got bad advice and should sue the person(s) who gave it to him... unless, of course, it was someone without malpractice insurance.
That's when the IRS suit starts to grow wings.
Herbstreit's intention (donating the house for firefighting practice) was noble.
Not researching his tax options was dopey.
Probably just another way the gov't is screwing hard working people. But on the other hand you think he would have something in righting. lol
If he didn't ask the IRS if it was tax-deductable charitable donation, then he should pay and drop the lawsuit.
I can't believe their lawyer is sayin it is not fair for them to not have the tax deduction. Him and his wife should have asked the IRS first before they burn down their house.
One more thing only the stucture was burn down, their is no way he should believe he should get the tax deduction for the entire cost of the house. Come on the property the location is part of the sell cost of the house. He didn't donate the entire property so why should he get the write off for the entire property
Another Buckeye dope, he thought he could save the expense of having the house torn down, well, he did.
This type of donation has been widely accepted by the IRS. I have personally processed about 4 such donations while employed by an Ohio fire dept. The only issue he could have come across was not completing a new appraisal. You can only write off the appraisal amount not your purchase price. If that is the case sorry Herby