Is make-up a business deduction

[TMI Moderator]

All you timid tax professionals!

The "adaptable for street wear" rule for CLOTHING has evolved from court cases and is based on IRC 262 that says personal expenses aren't deductible. One such court case was Ozzie and Harriet, the real ones. The court found that clothing owned by and stored at the studio was not adaptable for street wear, but clothing worn mostly by the kids outside the studio was adaptable and therefore wasn't deductible.

The rulings are based on what is deemed "acceptable" in the society and time period in question. For example, if you're in a play about Henry VIII, you could wear your costume on the street, but it would not fit today's style. Therefore it would be deductible clothing.

In short, all the discussions have been subjective discussions in court cases specifically about clothing. Why is everyone so quick to say "Nay!" and lump makeup in?

I'd explain the clothing rules to the client and say it will be disallowed by an agent if she's audited. But I'd give her that choice. I do believe it's a gray area. When my father was in the tax business, it was malpractice for a CPA to recommend against taking a deduction if it was a gray area. You explained and gave the choice to the client. Times have changed. We've allowed ourselves to become agents of enforcement.

How about makeup for the local female news anchor? She gets the makeup before airtime, and she can wear it after she gets off work. Is the value of that makeup added to her income in box 1 of Form W2? It is with clothes if she wears them outside of work.

As to the company supplying the makeup, it wouldn't make any difference. If it really is a personal expense, it would be added to income.

Makeup for the male news anchor would probably fall under the "society dictates of style," depending of course on what part of the country you're from.

[Snaggletooth]

Stage Makeup

Paul, makeup for Stage and TV lights would DEFINITELY fly.

The cosmetics for stage lighting are exceptionally heavy, such that in the glare they make the subject look "normal" to spectators.

However, if one of these people wore this makeup "on the street", they would look like a vampire. Like a jack-o-lantern with the candle blown out.

[New York Enrolled Agent]

Paul
Are you having an Armando identity crisis? TIMID tax pros??? More like, realistic tax pros. Maybe, its simply time to stir up the pot.

How can you possibly see any way Bonnie's taxpayer can overcome the inherent personal nature of this expense and the resulting prohibition of §262? This is NOT Gene Simmons - his stage makeup is a different story.

You write: "I'd explain the clothing rules to the client and say it will be disallowed by an agent if she's audited" Does that mean you're taking a position on a tax return which you KNOW to be wrong? You then note: "Is the value of that makeup added to her income in box 1 of Form W2" No, if nothing else, a deminimis fringe benefit under §132. Actually, some of the TV makeup is probably removed after the show. Much of it is too garish to wear outside the bright lights of the studio. Next, you'll want to deduct the tooth whitening for the TV anchor!!

[TMI Moderator]

You write: "I'd explain the clothing rules to the client and say it will be disallowed by an agent if she's audited" Does that mean you're taking a position on a tax return which you KNOW to be wrong?

Stir things up? Me? Armando might do that, but not me.

When did a Revenue Agent's opinion become the final word in tax law? Although that's the exact attitude the IRS has been successful at fostering, just because a Revenue Agent would turn their nose up at a deduction doesn't make it wrong. I've seen countless situations where a Revenue Agent has taken a position that is contrary to what I know to be proper treatment under the tax code.

Too many tax professionals prepare returns based on being frightened of what a Revenue Agent might think. That's what I mean by "timid."

If the client is timid, that's fine. Let them make the decision when you tell them that a Revenue Agent would disallow the deduction. Let the client get scared and say "I don't want to take it then."

This doesn't prove the makeup deduction legitimate or not. But by golly gosh darnit, make recommendations based on your knowledge of tax law, not on what you're worried that an RA might say. If you believe it's a gray area, present it as such to your client. If you believe it's a slam dunk nondeductible, present it as such to your client. But don't go through your professional life worrying about doing everything you can to make sure you're going to please every RA you might run into.

If you've been accused of a crime, are you going to hire a lawyer who says "I don't want to say anything that the DA might disagree with?"

Too many people are lost to the fact that our relationship with IRS representatives is adversarial.

[Brad Imsdahl]

How about makeup for the local female news anchor? She gets the makeup before airtime, and she can wear it after she gets off work. Is the value of that makeup added to her income in box 1 of Form W2?

TTB, page 13-28, "the value of property or services provided to employees so that the employee can perform his or her job is excluded from taxable wages under Section 132(d)."

There goes that argument. I don't see the makeup issue as being gray. It is pretty clear, when you consider court cases on similar expenses.

For example, the hair cut issue was solved in Drake v. Commissioner, 52 T.C. 842 (August 20, 1969) where an enlisted man in the U.S. Army was required to have his hair cut at least every 2 weeks. The court ruled the haircuts were personal expenses and not deductible. The court said expenses for personal grooming are inherently personal in nature. For example, the cost of dentures used to aid an actor’s enunciation was held not deductible. The cost of a hearing aid used by a lawyer both in his trade and for personal purposes was held not deductible.

The court also made this comment: “Many employers, expressly or otherwise, establish standards to Which their employees are expected to conform. Men are to be clean shaven and are often required to wear suits, ties, and clean shirts, and women are expected to be dressed attractively. To conform to these requirements, employees must make expenditures which would not be required if they were at home or not on the job. Nevertheless, Such expenditures for general personal grooming are inherently personal in nature and cannot be considered as business expenses.”

[Brad Imsdahl]

Here is an interesting case, Richards v. Commissioner, T.C. Memo 1999-163, May 14, 1999.


Excerpts from this case: “The issues for decision are… (3) whether petitioner Ruth Baime Richards (Mrs. Richards) conducted her actress model activity with the objective of making a profit within the meaning of section 183; if so, (4) whether petitioners have substantiated the ordinary and necessary business expenses of this activity;…”

“4. ACTRESS-MODEL EXPENSES… Petitioners claimed a deduction of $960 for miscellaneous expenses for hair and wig preparation, cosmetics, clothing, alterations, cleaning, supplies, fur coat storage, gifts, supplies, and meals. Petitioners did not offer any documentation or testimony on the breakdown of how much was spent on each item. Furthermore, some of these expenses are not deductible business expenses. <<ENDNOTE 6>>”

“6/ It is well settled that clothing that is suitable for general or personal wear does not qualify as a business expense under sec. 162. See, e.g., Green v. Commissioner, T.C. Memo. 1989-599. Such costs are not deductible even when it has been shown that the particular clothes would not have been purchased but for the employment. See Stiner v. United States, 524 F.2d 640 (10th Cir. 1975); Donnelly v. Commissioner, 262 F.2d 411 (2d Cir. 1959), affg. 28 T.C. 1278 (1957). Furthermore, expenses related to hair salon visits and cosmetics are inherently personal expenses under sec. 262.”

Issue solved. Make-up required to be worn by women on the job is not a business deduction.

[TMI Moderator]

Client works as a massage therapist at Merle Norman and they require her to wear their makeup to work. Otherwise she does not wear makeup at all. Would the makeup she wears to work be considered an employee business expense?? Just wondering what everyone else thinks??

Thanks
Bonnie

Not so fast.

The orginal post said "Otherwise she does not wear makeup at all."

In Nelson v. Commissioner, T.C. Memo 1966-224 (Ozzie and Harriet), the Nelsons purchased clothing that would have been perfectly suitable for street wear, but there was another factor present that the court said made the deduction allowable. The Nelsons would change their clothes at the end of each workday and give the clothes to their wardrobe manager because they had to be cleaned and pressed and ready for retakes, etc. They never had access to the clothing during personal time. From the decision:

"Such personal use of such clothing as the record discloses is so little as to be de minimis on the part of petitioner Oswald Nelson. No indication of personal use thereof by Harriet Nelson may be concluded from the evidence before us."

Clearly from the decision, if the clothes are kept at work all the time, the clothes are not available for street wear and are not considered personal-use items. It makes sense. It's my understanding, for example, that major network anchors have their on-air clothes provided to them, and they wear the clothes only at work. Does the value of the clothing end up on their W2?

If the client in this situation truly "otherwise does not wear makeup at all," and the only place she wears makeup is at work, and it's a condition of employment, I contend that it rises at least to the level of gray area, especially if one is going to say that makeup falls into the same category as clothing.

[Brad Imsdahl]

The Nelson case was not a debate over whether the clothing was suitable for every day use or not. The IRS disallowed the cost of clothing for not having proof of the expenses incurred. They had poor records.

Not a very good case to make your case with.

[TMI Moderator]

The Nelson case was not a debate over whether the clothing was suitable for every day use or not. The IRS disallowed the cost of clothing for not having proof of the expenses incurred. They had poor records.

Not a very good case to make your case with.

You're taking a quick glance at the wrong part of the court decision. You are referring to the kids' clothes that the court disallowed, in part because of poor records, and in part because the kids did not leave the clothes at the studio all the time. Ozzie and Harriett got the deduction for their clothes, poor records and all.

Speaking of poor records...

...oh, I'll resist making a comment about Ricky's music career.

[Brad Imsdahl]

Leaving the clothes at the studio and not wearing cosmetics at home are two completely different situations. As I understand it, Ozzie and Harriett were not nudists. They wore other clothing during the times they were not on the set.

For you to make a comparison of cases, you would have to argue that the cosmetics worn on the job cannot be worn at home for some job related reason. There was a job related reason that clothes worn on a TV show should remain at the studio. There is no job related reason for this taxpayer to choose not to wear make-up while away from her job. It is a personal decision, not job related to go make-up-less.

And as I said before, the Ozzie and Harriett case seemed to be centered more on the issue of substantiation of expenses, rather than the clothes being personal in nature.

[Joe Btfsplk]

If make-up is deductible....

If her job requires her to use make-up and it is deductible, then, since my job requires me to see what I am doing, I should be able to deduct the cost of my glasses as a business expense rather than as a medical expense (which is never over 7½ % of my income)..

[jainen]

>>the cost of my glasses as a business expense<<

Glasses are a listed item since they are suitable for recreation like watching TV. You must maintain a usage log. Every time you look out the window and start daydreaming, you have to write it down.

[oceanlovin'ea]

Glasses

On the glasses issue, I have a client who just bought computer glasses. He is a draftsman and needed the glasses for work. Would that be deductible?

In fact, I need to get a new pair of glasses to use when I am on the computer. My trifocals aren't working very well. I need some that I can read my papers and see the screen. Can I deduct them?

Linda F

[Brad Imsdahl]

Coffee break time

Now that you mention it, I think I should be able to deduct my watch. If I don’t get my caffeine fix at exactly 2:30 PM every day, I get very cranky and can’t get any work done.

[BP.]

Now, you know this was coming, Brad, right? Pub 17, p. 193, "You cannot deduct the cost of a wristwatch . . . " Two-thirty seems to be the universal caffeine-o'clock. Diet Pepsi time!