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LONG UNDIES: TOASTY, BUT NO GOOD FOR TAX DEDUCTION

August 13, 2008

A UPS driver went to Tax Court to defend deductions for purchases used to keep up the appearances of the Brown Army. The judnge said he could deduct keeping tidy, but not keeping warm. The judge explained the rules for deducting work clothes:

Petitioner claimed business expense deductions for the costs of cleaning his State uniforms and purchasing clothing to keep him warm and dry when working for UPS. The costs to purchase and maintain work clothing may be deductible under section 162 if the taxpayer establishes that: (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 so worn.

While the tax law has strict substantiation rules for travel and entertainment costs, the rules are looser for other business expenses, and the judge cut the UPS man some slack:

With respect to the uniform cleaning, respondent does not dispute that petitioner has satisfied the legal requirements for deductibility. However, respondent disallowed the deductions for lack of substantiation. The Court accepts petitioner's testimony that he paid to have his State uniforms cleaned. Therefore, petitioner is entitled to deductions for these expenses. Petitioner did not provide any information as to the frequency or cost of his uniform cleaning. Estimating his expenses, see Cohan v. Commissioner, supra at 544, we allow $10 per week, or $500 for uniform cleaning for 2003 and 2004.

But he drew the line just inside the outerwear:

UPS required petitioner to wear clothing appropriate to the weather conditions at BWI. Petitioner purchased rain gear, long underwear, and watertight boots to wear when loading freight for UPS. Petitioner testified that the clothing and other items he purchased were suitable for general wear. No deduction is allowed for personal, living, or family expenses. Sec. 262(a). Since general-purpose clothing is considered a personal expense, petitioner is not entitled to any deduction for his costs to purchase or maintain clothes worn when working for UPS.

The Moral? If you can wear it outside of work, you can't deduct it, even if that's the only place you do wear it.

Cite: Cottrell, T.C. Summ. Op. 2008-101

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