Here’s a taxing rags’n’riches claim

Entertainment lawyers often get called upon by demanding clients to make challenging circumstances work out, just so. For example what most of us might consider outrageous perks or mere special accommodations, well, they might be a ‘must’ part of a star contract or a rights agreement. 

But a recent case out of the Midwest reminds that people in the public eye, no matter their contentions about what the world should accord them, can get themselves in taxing situations.

Let’s look at what happened with a Buckeye who held down a job that the Brits call ‘news reader.”

Call it the matter of `Broadcast Anchor, Beware.’

In a major “wardrobe malfunction” last week, the U.S. Tax Court denied business-expense deductions claimed by a TV news anchor for her wardrobe and other personal expenses.

On Schedules A of her Federal income tax returns for the years from 2005-2008, she claimed $20,000 a year, during which time she  worked as an anchor at an NBC affiliate in Columbus, Ohio.

She now faces section 6662 accuracy-related penalties for each year’s return fraught with inaccuracies.

Interestingly, a Forbes blog pointed out that Anietra Hamper, the anchor, included deductions for lounge wear, a robe, sportswear, lingerie, thong underwear, an Ohio State jersey, jewelry and running shoes.

According to the IRS’ Miscellaneous Guidelines, one may deduct the cost and upkeep of work clothes if the clothes are worn as a condition of employment and the clothes are unsuitable for everyday wear.

Petitioner news anchor claimed that the clothes purchased for work fit this description; she asserted the station’s dress code was too “conservative” for her daily life garb and, but, for the job, she would not have bought the clothing.

As noted in the opinion, the network’s “dress code” was rather an “ideal”  to be noted by the anchors in selecting on-air outfits and called for the “selection of ‘standard business wear’, typical of what someone might wear on “any business day in a normal office setting anywhere in the USA.”

Attorney Paul Caron explained in his blog that “although a business wardrobe is a necessary condition of employment, the cost of the wardrobe has been considered a nondeductible personal expense pursuant to § 262.  The general rule is that where business clothes are suitable for general wear, a deduction for them is not allowable. Such costs [therefore] are not deductible even when it has been shown that the particular clothes would not have been purchased but for the employment. “

2 thoughts on “Here’s a taxing rags’n’riches claim

  1. Interesting. I mean, it makes logical sense, but I can see where the average person could be confused. Most people don’t envision wearing a suit as “general” wear clothing, and would more than likely prefer to not have to wear one at all. In some situations, it could be argued that a suit is the “uniform” of a particular business. And although the term “leisure suit” connotes that a suit can be a form of casual wear, I think you will be hard pressed to find large groups of people who enjoy “leisurely” wearing a suit. That’s just my opinion.

  2. Also to note, I think in the entertainment context, one has an even more legitimate argument. Again, the regulation makes sense. But it’s not unreasonable to think of one’s on-air attire as a wardrobe or uniform for one’s position. Whether it’s the local news, SportsCenter, or even a sitcom, there’s a certain look a show’s “representative” is supposed to convey. I guess you could argue that if she doesn’t like it, she doesn’t have to work there. But maybe she should argue that the only difference between her and someone working at McDonald’s is the range of choice; at the end of the day, neither really gets a choice in what they will wear.

    That being said; I’m curious how she managed to not get caught for 4 years.

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