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Post Date:  5/20/2016
Last Updated:  5/20/2016

Summary
Cross References
- Barnes, T.C. Memo. 2016-79, April 27, 2016

The taxpayer worked as a salesman for Ralph Lauren Corporation which designs, markets, and distributes men's apparel such as polo shirts, casual shirts, T-shirts, sweatshirts, sweaters, dress shirts, suits, sport coats, and pants. Ralph Lauren required all employees who worked in corporate sales positions to wear Ralph Lauren apparel while representing the company. Consequently, the taxpayer purchased Ralph Lauren shirts, pants, ties, and suits, and deducted the costs as unreimbursed employee business expenses on Schedule A, Form 1040. The IRS disallowed the deduction claiming the expense was a nondeductible personal expense.

IRC section 262 provides that a taxpayer generally cannot deduct personal, living, or family expenses. IRC section 162(a) allows a deduction for all ordinary and necessary expenses paid or incurred in carrying on any activity that constitutes a trade or business. An individual may be in the trade or business of being an employee, and in such a case an ordinary and necessary expense incurred in the trade or business of being an employee is deductible under IRC section 162.

Generally, expenditures for the purchase and maintenance of clothing are nondeductible expenses, even though the clothing is worn by the taxpayer in connection with his or her trade or business. The Tax Court has established three criteria for the cost of clothing to be deductible as an ordinary and necessary business expense:
1) The clothing is required or essential in the taxpayer's employment,
2) The clothing is not suitable for general or personal wear, and
3) The clothing is not worn as personal wear.

The taxpayer was required to wear Ralph Lauren clothing while representing the company. Ralph Lauren clothing, however, is suitable for general or personal wear. Thus, the taxpayer's costs to acquire and maintain his Ralph Lauren clothing is not deductible.

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