The failure in this analogy is that it's not the baker tossing away the cupcakes, it's a tax accountant in the background. A baker creates a batch of cupcakes.

The failure in this analogy is that it's not the baker tossing away the cupcakes, it's a tax accountant in the background. A baker creates a batch of cupcakes. They're about to sell this batch to a customer, but then the tax accountant comes in and tells them to toss the batch because the customer might not like them. So the batch gets binned, despite neither the customer or the tax accountant having tasted any cupcakes. Then they write that off as a business expense.