I can’t prove my deductions, but you should allow them because I’m sure I have them, and it’s not that much in the big scheme of things. An actress took a novel approach to convince the Tax Court to let her deduct clothing, makeup and other items that she said were business expenses in her acting career:
Instead of relating particular exhibits to particular deductible categories in her brief, she repeated her claims that all of the disputed expenses were related to her employment and supported by the disorganized documents. She did not respond to respondent’s specific analysis of the documents and explanation of the applicable Code sections. Overall petitioner argues that she should be given special leeway because she obviously incurred deductible expenses and the amount of the deficiency is small.
Cut me a break, what’s my little deficiency to a trillion-dollar deficit? The court was unconvinced. With respect to her deductions for clothing and makeup, the court noted:
Petitioner resided in California when she filed her petition. During 2009, petitioner was an actress, a writer, and a college student. She was a stand-in for a character known as Garcia on the television show “Criminal Minds.”
Petitioner also claimed as business expenses items including makeup and beauty expenses, wardrobe expenses, and laundry and cleaning expenses. She claims that these expenses were necessary because of the unique dress and makeup of the character Garcia.
Expenses relating to clothing, dry cleaning, and personal beauty items are deductible only if they are “not suitable for general or personal wear and not so worn”. Yeomans v. Commissioner, 30 T.C. 757, 767-769 (1958). Neither petitioner’s records nor her testimony tied specific items of expense to the type of clothing and related items that would not be suitable for everyday wear. To the extent that items cannot be tied to petitioner’s job with “Criminal Minds”, her arguments about the uniqueness of Garcia are not persuasive.
The moral? Unless you have to buy a uniform, it’s hard to deduct clothes, as TV anchor Anietra Hamper learned the hard way. And whatever you deduct, you need to have some way to support the deduction. The argument that your small deduction is immaterial in the big scheme of things doesn’t work well.
James Taranto, who runs the Wall Street Journal’s “Best of the Web” feature (with a format suspiciously like the Tax Update’s Tax Roundup), has some good observations on the evolution of the IRS Tea Party scandal. He suggests how the agency could come to target the President’s political opponents without anybody having to tell them to do so:
The memo presents no evidence that the White House directly ordered the IRS to crack down on political opponents. Instead, it is consistent with the theory, described here in May, that IRS personnel responded to “dog whistles” (in Peggy Noonan’s metaphor) in public statements from the president and his supporters.
That’s much more depressing than if the White House had issued such orders. That means the problem is part of the IRS culture, making it very difficult to fix.
TaxProf, The IRS Scandal, Day 134
William McBride, World Economic Forum: U.S. Still Sliding (Tax Policy Blog):
America’s least competitive areas include taxes and government debt. The U.S. ranks 69th, right behind Ethiopia, in terms of the impact taxes have on incentives to work and invest. The U.S. ranks 103rd of 144 countries in terms of the total tax rate as a percent of profits.
Look out, Ethiopia.
Tax Justice Blog, Stop Tax Haven Abuse Act Would Curb Some of the Worst Multinational Corporations’ Tax Dodges. This would be less of a problem if the problems noted in the previous item were addressed.
Elaine Maag, Senator Lee’s New Reform Plan Focuses on Young Children (TaxVox)
Andrew Lundeen, Roughing the Passer: Congress Won’t Find Much Revenue from Taxing the NFL (Tax Policy Blog)
Jack Townsend, Atypical Offshore Account Plea for Art Dealer
Leslie Book, Remands and the Nature of CDP Hearings (Procedurally Taxing)
Robert D. Flach has a mighty “meaty” Friday Buzz!
The Critical Question: Did Tax Court Just Say That There Are Thousands Of Unfiled Oil Partnership Returns ? (Peter Reilly)
News from the profession: Accountants Love Their Jobs Because They Get to Manipulate Numbers All Day Long, Says Guy (Going Concern)
Tags: TaxProf, tax court, TaxGrrrl, Going Concern, Jack Townsend, Judge Cohen, Peter Reilly, William McBride, Anthony Nitti, The Critical Question, Elaine Maag, Andrew Lundeen, Eliana Johnson, James Taranto