Discussion:Ordinary and Necessary
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| {{ForumReplyPost|UserID=Fr. Mackelhenry|Date=6 November 2009|Text=That's the most sensible thing you've said in months.}} | {{ForumReplyPost|UserID=Fr. Mackelhenry|Date=6 November 2009|Text=That's the most sensible thing you've said in months.}} | ||
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| + | {{ForumReplyPost|UserID=Harry Boscoe|Date=6 November 2009|Text=I think the depreciation of the plane was a simple issue of RTFQ. IIRC, the court found that there is no "ordinary and necessary" qualification of the depreciation deduction under IRC Section 167, and they found it .. get this .. by reading the Code. | ||
| + | IRS don't know how to read, leastwise so it seem in that case. | ||
| + | }} | ||
Revision as of 16:43, 6 November 2009
Discussion Forum Index --> Tax Questions --> Ordinary and Necessary
| 5 November 2009 | |
| I've come across these two scenarios in conversations during the last tax season and for some reason, they popped into my head this week while I'm brushing up on Sch C expenses. Now that I've found this forum of vast knowledge, I'm curious to see what your thoughts are.
First example. A self-employed dance instructor also competes in dance contests professionally. Some of her competition clothes are almost regular looking, but most are ostentatious and fit for the circus or ice dancing. Would any of you have a problem with taking a deduction on all the clothes for competition, or would you exclude the "normal" looking ones? And what about specialty jewelry that no one ought to get caught dead wearing? Second example. A full time realtor has deducted costs for karate classes as a business expense. She claims it's for her safety on the job because (1) she's of a slight frame; (2) the houses she shows are sometimes in rough neighborhoods; (3) as part of her duties it's common for her to be in houses with strangers; (4) the Realtor Association in her area recommends having some means of self-defense. Her arguments lend weight to it being necessary, but would it be ordinary? I supposed we can't know that without doing a survey of realtors in that area. Another factor is she was taking karate classes before becoming a realtor, not because of having become one. | |
| 5 November 2009 | |
| A) Diana Shore had a famous case which she won, because the gowns were so tight she could not sit down in them. In general, if costumes can only be used for performing, then they are allowed.
B)Karate was a hobby, before it was a business decision. Ix-Nay Arate-Kay. I know, what a cruel blow! | |
Death&Taxes (talk|edits) said: | 5 November 2009 |
| I would divide the dancer between costumes and street wear. A couple who were musicians told me once that 'every thing we buy is black' to which wife added 'even our underwear.'
I can't go along with the karate class..... Go to our urban tax legend discussion. I think it is now on the Chat Forum. | |
| 5 November 2009 | |
| On the "normal" looking outfits, have the name of her dance studio embroidered onto the rear-end to make it deductible. | |
| 5 November 2009 | |
| As someone with a lot of personal experience with ballroom dance instructors and competition, I agree that the competition costumes that are clearly not suitable for street wear are deductible. They are ordinary and necessary for competition, which is part of being a dance instructor. Many of the ball gowns and latin dance costumes cost many thousands of dollars as they are made by hand with all kinds of added shiny stuff. I would also deduct their dance shoes, since they are made with a special suede sole that does not mark the dance floor. No self-respecting dance professional would ever wear their dance shoes on the street. I'd be inclined to deduct the jewelry too if it's that ostentatious. I wouldn't deduct clothes they wear for teaching or that they wear on the street.
I've had musicians and dancers want to deduct their hair-do's, makeup, and hose, but I won't do that. | |
| 6 November 2009 | |
| Thanks for your thoughts. Mine were similar. The dancer ended up being my client and I divvied up her clothes and jewelry. The realtor passed. Now let me go take a look at those urban tax legends for some laughs. | |
| 6 November 2009 | |
| Nice problems. Basically, to be deductible as a business expense, the expense must be:
1) ordinary and necessary The test is subjective, but it's mostly common sense. Perhaps the biggest factor is, does it pass the laugh test. On that score, I'm not sure karate lessons qualify. They might.. but it's a stretch. As for the dance competitions, they would qualify if they were ordinary and necessary as a means of advertising the business. It's arguably a hobby loss, but it could go both ways. In the end, these types of issues are not cut in stone. It really comes down to how aggressive the client wants to be. | |
Death&Taxes (talk|edits) said: | 6 November 2009 |
| When this argument comes up with taxing authorities, I always pull out Robert Noyce and both the expense and depreciation of his private plane. That court gave great discretion to the decision of the businessman. Of course, Noycee was one of the founders of Intel and had good reason to use his plane. Said decision won't help the oboeist who wants to deduct her black underwear or, for that matter, her black turtleneck. | |
| 6 November 2009 | |
| Look at the Indians. An Indian can't write off his outfit, but a white man dressed up as an Indian can. That's not right.
I've had good luck with tattoos though with the girls next door to me at the strip club. I depreciate the cost of the tattoos over the remaining useful life of the dancer (if they have a phone number or business address for where they dance). As far as ballroom dancing: as a pastor, I'd put a confiscatory excise tax on the whole industry, so we wouldn't even get to the point of writing anything off. Do we want all the men in this country to end up as window dressers? Besides that, there are no windows to decorate at Walmart. Finally, the karate: no. It's not American to begin with. She needs a gun, that's obvious. But, I won't go along with realtors buying guns now. So many of them are sitting around in misery, they could take their own life. | |
Fr. Mackelhenry (talk|edits) said: | 6 November 2009 |
| That's the most sensible thing you've said in months. | |
Harry Boscoe (talk|edits) said: | 6 November 2009 |
| I think the depreciation of the plane was a simple issue of RTFQ. IIRC, the court found that there is no "ordinary and necessary" qualification of the depreciation deduction under IRC Section 167, and they found it .. get this .. by reading the Code.
IRS don't know how to read, leastwise so it seem in that case. | |
