Discussion:Makeup - Ordinary and Necessary?

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Discussion Forum Index --> Tax Questions --> Makeup - Ordinary and Necessary?


Sofcpa (talk|edits) said:

28 March 2014
Taxpayer is Schedule C makeup salesperson. Expensive "high end" makeup.

Taxpayer is required by supplier to purchase and use product when conducting sales.

Would this qualify as ordinary and necessary? I would normally say no, but I doubt the taxpayer would be able to perform her job without using the product itself. Would you buy an Android phone from someone who had an iphone clipped to his belt???

Harry Boscoe (talk|edits) said:

28 March 2014
All of my Maserati salespersons drive Hyundais. And I remember my boss telling me I had to wear a tie at work. I vote personal, nondeductible.

But you had better look the other way when your client takes makeup from her inventory...

Sofcpa (talk|edits) said:

28 March 2014
I'm ignoring the fact that the company is requiring her to purchase and wear the makeup. My argument is that she would not be able to make a sale, if she weren't using the product. This is not the TV anchor who is trying to write off makeup and personal trainer because her appearance is "part of the job". I feel this is different.

Craigums (talk|edits) said:

28 March 2014
I can't find the substantiation for it at the moment, but isn't there something about the expense needing to not yield personal benefits, the test being that they would prefer not to have the benefits of the expense if they didn't need to for work, like in Chesty Love case?

Sofcpa (talk|edits) said:

28 March 2014
If I were buying a Maserati, what the salesperson drove would not have any bearing on my decision to purchase (unless they were driving a Ferrari or equally expensive vehicle). What the salesperson drives would not affect their ability to sell. My argument on this is that she would not be able to sell this product if she weren't wearing it. It would be impossible. Period.

Good call on checking the inventory though...

Harry Boscoe (talk|edits) said:

28 March 2014
Perhaps you could look the other way when she takes "demonstration samples" from her inventory...

Seaside CPA (talk|edits) said:

28 March 2014
And sometimes you just can't look the other way. My small schedule C person gave me $1,600 in makeup sales, and COGS came out to over $2,000. When I started questioning, they assured me sales were correct. With more questioning, they remembered they had taken some of the inventory to use personally, given as gifts, etc. Now, somehow we have to back into the purchases that were sold. This, on top of mileage over 11,000. Yeah, I questioned that too!

STG (talk|edits) said:

28 March 2014
Those numbers for sales of high end merchandise make me question the veracity of their business. If this isn't the first year or two I would start wondering about Hobby vs. Business. I assume this isn't Mary Kay, but the IRS audit guides take a pretty aggressive tone wrt personal vs. business expenses and hobby vs. Business on MLM "businesses". I would tread carefully on this one.

EZTAX (talk|edits) said:

28 March 2014
Not deductible. Remember the case about the news anchorwoman and the $50K wardrobe? No dice.

Ckenefick (talk|edits) said:

28 March 2014
Look at that "Hair Piece" discussion...probably the most involved tax discussion you'll find on the planet regarding make-up (and hair pieces).

Spell Czech (talk|edits) said:

28 March 2014
What's the 1099 form that reports to the IRS how much "stuff" a sole-proprietor bought at wholesale, for resale? You think IRS isn't looking but they are. MLM and its kin have been and maybe still are an IRS target.

Sofcpa (talk|edits) said:

28 March 2014
Thanks Ckenefick. Lots of great info in that thread.

Ckenefick (talk|edits) said:

28 March 2014
It was pretty hairlarious too.

Wiles (talk|edits) said:

29 March 2014
If the ladies in Robert Palmer's Addicted To Love video were required to buy their own clothes & make up in order to get hired, would that have been deductible?

Spell Czech (talk|edits) said:

29 March 2014
Robert Palmer's ladies and their dresses: If the ladies can't *sit down* without splitting the dress, I think it's considered inappropriate for everyday wear, and the cost is deductible. I think the court case was IRS v. Dinah Shore. I think it was many years ago.

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