IRS feeling burned by house deductions

The house on Sherwin Road was put to good use before the fire department burned it to the ground.

SWAT teams barged through the front door in an exercise on dealing with domestic violence. Rescue crews scattered mannequins around the house and blew smoke through the halls to simulate a meth-lab explosion. Firefighters set fires in rooms and practiced putting them out. In one last drill, they torched the place.

Five years later, a dispute still smolders over the homeowner's attempt to claim a $287,000 charitable tax deduction for donating the house to the fire department, which has burned down at least 32 such homes in Upper Arlington since 1988.

The Internal Revenue Service (IRS) is trying to stop homeowners from claiming such deductions.

Lured by the prospect of free demolition, homeowners around the country sometimes offer their houses to the local fire department for training. The department burns the house, clearing the way for the owner to rebuild.

In court cases in Ohio and Wisconsin, the IRS is arguing that because such houses are scheduled for demolition, donating them for fire training isn't an act of charity.

The dispute adds a new element of controversy to the decades-old debate over whether the risks associated with "live burns" — more than a dozen firefighters have been killed in the past two decades — outweigh the training benefits.

It's impossible to know how many people have tried to claim such deductions; the IRS would not comment.

Steven Willis, a professor at the University of Florida who studies income-tax law, said a charitable deduction can be no greater than the value of whatever was donated, and a house given to a fire department has negative value, since the owner was going to have to pay to get rid of it.