Business Monday – Fashion Suicide and Taxes

On Oscar Night, Hollywood’s annual exercise in self-indulgence, when stars don their most formal evening wear to parade a red carpet in broad daylight. This year’s nominees went home with “swag bags” worth a record $100,000 – taxable, of course. But you don’t have to be a Hollywood celebrity to land in tax trouble for keeping up appearances, as a recent Tax Court case showed.

Anietra Hamper worked as a morning and noon news anchor for WBNS-TV in Columbus, Ohio. (You know the type – perky, poised, blonde, blow-dried.) The network required her to maintain a specified professional appearance as described in the station’s Women’s Wardrobe Guidelines – specifically, “‘standard business wear,’ typical of that which one might wear on any business day in a normal office setting anywhere in the USA.” The guidelines didn’t call for spending a lot to comply – in fact, they stated that off-the-rack outfits would generally be more appropriate than excessively stylish designer wear. They also required her to maintain her hair in a neat and professional cut and maintain her fingernails at a reasonable length, finished with conservatively colored nail polish.

                                                

Hamper apparently saw the network’s rules as more than just “guidelines.” She saw them as a green light to shop till she dropped – and deducted it all, too! From 2005 through 2009, she claimed a boutique-busting $83,678 in unreimbursed employee business expenses for traditional business suits, lounge wear, a robe, sportswear, active wear, lingerie, cotton bikini and cotton thong underwear, and evening wear. She also wrote off expenses for an Ohio State jersey, jewelry, bedding, running and walking shoes, and dry cleaning costs. She literally shopped all over town, from Nordstrom to Old Navy and everywhere in between.

And Hamper deducted more than just her wardrobe, too. She wrote off special contact lenses she claimed she needed for reading the teleprompter (along with contact lens solution, of course), Softsoap “Morning Mist” pump soap, haircuts, manicures, teeth whiteners, and skin-care products! She deducted her subscriptions to cable television, the internet, satellite radio, and magazines such as Cosmopolitan and Glamour. She even deducted a gym membership which she said she used for self-defense classes to protect herself from stalkers.

Hamper reported she wore the business clothes only at work and maintained her business wardrobe separate from her personal wardrobe. She claimed the requirement to wear “conservative” clothing made her business clothing unsuitable for everyday wear. Unfortunately for her, the IRS says nothing about “conservative” clothing being unsuitable, and holds that when business clothes are suitable for general wear, they’re not deductible. (An Ohio State Buckeyes jersey, not suitable for general wear? Really? Maybe if she were working in Ann Arbor, Michigan – but not Columbus, Ohio!) So the IRS denied nearly all her deductions and slapped her with over $3,000 in accuracy-related penalties for good measure. Last week, the Tax Court upheld the IRS, scripting an end to Hamper’s story that she can’t be happy to report.

Fernando Lamas famously said “it is better to look good than to feel good.” Well, whether or not the IRS agrees, they certainly don’t think Uncle Sam should pay for it! Call us if you’re faced with a deductibility dilemma, and we’ll at least get you feeling good about dressing for success!

Larry D. Stone,  Stone CPA

970.668.0772, 970.668.0434, 888.668.0772

larry@stone-cpa.com

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