IRS nixes tax deductions

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By Meghan Barr ASSOCIATED PRESS

UPPER ARLINGTON, Ohio

The battered 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 one room after another and practiced putting them out. Then, in one last drill, they torched the whole place.

Five years later, though, 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 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 purposes. The department burns down the house, clearing the way for the owner to build a bigger and better home.

In court cases in Ohio and Wisconsin, the IRS is arguing that because such houses are already slated 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" - in which more than a dozen firefighters have been killed in the past two decades - outweigh the training benefits.

Fire chiefs say live burns supply invaluable training for volunteer departments, which make up the bulk of the nation's firefighters. Some fear that the tax disputes will discourage donors from coming forward.

Nobody tracks the number of live burns each year, but fire officials say they are increasingly rare because of mounting safety and environmental restrictions and because fewer homes are up for demolition in the slumping economy.

"We need to keep our skills current. Those opportunities are going to become fewer and farther between," said Fire Chief Mitch Ross in Upper Arlington, the wealthy Columbus suburb where the Sherwin Road home owned by James Hendrix burned down in 2004.