Kirk Herbstreit, Burning Houses, The IRS And You

So here’s something I didn’t know: You buy a lot with a house on it, and you want to completely rebuild. But instead of paying to have the house razed, you can donate it to your local fire department, who will then burn it down for practice. And you get a nifty tax deduction for your efforts. At least that was the plan when ESPN college football analyst Kirk Herbstreit tried to do that in 2004.

Nope, said the IRS — not only will we deny your claim for a $195,394 tax deduction on the house, but we’re charging you an additional $134,606 in back taxes and interest. So the ex-Ohio State quarterback and his wife, Allison, are suing our government and its army of bespectacled number crunchers for that combined amount.

Columbus lawyer Terry Grady said the IRS didn’t challenge the deductions until 2004 — the year the Herbstreits donated their house.

“People have been led to believe (the practice) is sanctioned by the IRS,” said Grady, who sued the IRS on behalf of the Herbstreits and another Upper Arlington (Ohio) couple, James and Lori Hendrix.

The Hendrixes donated their house at 2580 Sherwin Rd. to the Upper Arlington fire department in 2004. The IRS rejected the $287,400 deduction after an audit and charged the couple $125,053 in back taxes and interest.

For the Herbstreits, the IRS decision, also after an audit, meant $134,606 in back taxes and interest.

Both couples paid what the IRS said they owed and now are suing to get the money back.

The IRS denied the claims, it said, because both couples donated only the structures, and not the land. Therefore, no deduction. But the city says it needs donations like Herbstreit’s, and since the IRS decision became public, no one is donating their homes. In addition to fire practice, the city also uses donated houses so that the police can simulate hostage situations. Well, now it’s all going to court.

It must have been quite a sight when the house went up in flames, though; Buckeyes fans could have used it as the bonfire the night before the Michigan game. Charred and sooty Lee Corso emerges from house: “Hey, you’re out of towels in your guest bathroom.”