It is a common misconception that companies deliberately set money on fire to claim losses on taxes. While it may seem like a good idea to some, it is not a legitimate tax strategy and would be considered fraudulent if discovered. The Internal Revenue Service (IRS) has strict rules and regulations that govern how companies can claim tax deductions, and setting money on fire would not meet these requirements.

Instead, companies are allowed to claim legitimate business expenses as deductions on their taxes. These expenses may include things like salaries and wages, rent, utilities, and supplies. As long as the expenses are necessary and ordinary for the operation of the business, they can be deducted on the company's tax return.

It's important to note that companies do not receive a dollar-for-dollar reduction in their taxes for every expense they claim as a deduction. The tax code is complex and includes various rules and limitations that can impact the amount of tax savings a company can realize. Additionally, tax brackets do not work in the way that some people believe, where earning more money can result in a lower net income due to higher tax rates.