I bought an AKC registered puppy a couple of months ago. I paid $1200. The night that I got the puppy I ended up in the ER. I was told by the doctor that my problem was caused by the puppy so I had to return it the next day. The breeder would only return $600, even though she was able to sell it to someone else for $1200.
I know this question is crazy, but I figured I ask it anyway. Is there any chance that this $600 is considered a tax deductible loss?
It would only be deductible if you bought the puppy for use in your business, which doesn't seem to be the case. If you bought it as a pet, it is a personal loss and is not deductible.
Bob Sandler
This is not a tax answer, but what did you contract say? I would lean heavily on the breeder, maybe even take him to small claims court. The intent of the parties to the contract was frustrated, and the breeder seems to be out no money. Did he sell it again quickly?
Personal losses are not deductible.
She sold the puppy within a few weeks for $1200. She said that I signed a contract that said refunds were at the discretion of the breeder. I probably did. I was an emotional basket case at that point and she had been so kind and understanding that it never occurred to me that something like this would happen.
I assumed this was the case, but thought I'd check since it's a lot of money to me.
Thanks for the reply.
yes, but frustration of purpose might trump the contract all together, except perhaps for her out of pocket costs keeping the puppy for a couple weeks. Maybe not worth fighting over, though.
any hope via casualty loss? Medical expense?
Even if a casualty loss is possible, the starting point is $600 and the practical result is no casualty loss after cranking the numbers.
And no medical allowed here.
To be a casualty, there would have to be "damage, destruction, or loss of property" (Pub 547). None of those things happened. In fact, she could have just parked the animal in a kennel for a short while until she found a buyer herself at fair market value.
The hospital emergency room expense would be a medical deduction if not reimbursed, and if it came out more than zero on Schedule A. But disposing of personal-use property at a loss (which is what happened here) is not deductible, as everyone has been saying.
-Mark Bole
Its not crazy, but it's not deductible either. This would be considered a personal loss and personal losses are not deductible.
HOWEVER, if the breeder was able to sell the puppy for another $1,200 they should have refunded you the full amount. Were it me, I'd file a small claims suit - seems the breeder may have been unjustly enriched by their actions. For the amount involved most attorneys won't take this case BUT a call to your local bar association should get you a referral meeting with an attorney for less than $100 - I'd make that call and discuss it with the attorney, maybe even ask him to look over your sale contract. You may find you have a small claims case worth pursuing. CAVEAT - IANAL!
Gene E. Utterback, EA, RFC, ABA
Thanks. I've already started looking into a small claims suit.
Not clear there's a case here. If the breeder could show that they could otherwise buy a similar puppy wholesale for $500, then it will be difficult to argue they should have paid more than $500 when taking it back. Perhaps 140% markup is typical in the puppy-breeding business. Cold-hearted perhaps but not unjust enrichment.
Steve
The legal concept to consider here is not unjust enrichment, but frustration of purpose.
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