Welcome to October gang!
Let’s get the month rolling with an interesting article about a concert pianist who had purchased a lot of fancy clothes (maybe even fancy shmancy) and tried to deduct them as business expenses. The IRS has been taking a closer look at people who are trying to deduct everything including the oxygen they breathe and hopefully this will wake some people up. Enjoy!
CONCERT PIANIST DENIED DEDUCTION FOR WORK CLOTHING
Court Case: Tilman v. U.S., 104 AFTR 2d 2009-5773.
Is the cost of clothing worn by a concert pianist at her performances deductible? In Tilman v.U.S., the U.S. District Court for the Southern District of New York held that these costs are not deductible. The pianist’s description of her “concert outfits” along with credit card bills showing the amounts spent with no detail as to what was purchased was not sufficient evidence to support her claim.
Background. Given certain circumstances, expenses for work clothing are deductible under §162(a). Expenses for work clothes are deductible if the clothing is (1) of a type specifically required as a condition of employment, (2) not adaptable to general usage as ordinary clothing, and (3) not worn as ordinary clothing.
Facts. The taxpayers filed a 2001 amended Schedule C, reporting a deduction of $4,615 for concert outfits worn during concert performances. The IRS denied the claim for refund, and the taxpayers filed a lawsuit in the district court seeking a refund. The taxpayer testified that a “concert outfit” varies by the type of venue at which she performs. Such outfits include a beautiful gown, or cocktail dress, and shoes that are “special.” The outfit also includes jewelry, such as earrings, necklaces, brooches, bracelets, rings, and watches. The taxpayer claimed that the clothing was “too pretentious” to be worn in a different setting.
Discussion. The IRS argued that because she bought the clothes at department stores, which sell clothes for general use, no deduction is allowed.
The court looked at whether the taxpayer demonstrated that the clothing was not adaptable to general use, and found no evidence to support this claim. The charge card statements did not provide a record of what clothes were purchased in 2001. Because the taxpayer did not provide evidence of the exact outfits, her statement that the clothing could only be worn at concerts was of no value. In addition, her own description of the outfits implied that they did not qualify for the deduction, because many women have beautiful gowns, cocktail dresses, and jewelry in their closets. The fact that other people wear such clothing in various other settings made the taxpayer’s claim that she could only wear the outfits for concerts irrelevant.
Application. When clothing is adaptable to general or ordinary use, then no deduction is allowed. A taxpayer’s subjective belief that her clothing cannot be worn elsewhere is not sufficient evidence to allow a deduction for the clothing.
The takeaway from this, gang, is to watch what you are putting down for deductions and expenses and make sure that you have a tax pro who knows what he or she is doing. By the way, I am looking for new clients so please don’t be bashful in contacting me.
Hope you all are doing well and welcome to October 2009. If there is anything else you want me to blab about, please keep those posts and inquiries coming in. I love all my readers (and viewers from Youtube etc).
Oct 02 2009
Kim Isaac Greenblatt
Concert Pianist Cant Claim Clothes 4 Taxes