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New! Comer – Week 3

Brett Comer(Oct 15, 2018 7:18 PM)– Read by: 2

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Sue’s situation is debate about what is an acceptable from AGI deduction since the tax code allows (at least in 2014) people to deduct employee business expenses from their AGI (Spilker, Ayers, Outslay, Weaver, Barrick, & Robinson, 2015).  This type of deduction is a miscellaneous itemized deduction that when combined with other miscellaneous deductions is subject to a 2% AGI floor (Spilker et al., 2015).  According to our textbook employee business expenses are limited to “those that are appropriate and helpful for the employee’s work” (Spilker et al., 2015, p. 6-26).  Some employee expenses are specifically prohibited such as job hunting outside of your career field, education outside of your career field, and commuting expenses (Spilker et al., 2015).  Plastic surgery or a physical improvement to your body is not specifically addressed so it must be determined whether it is considered an expense that is appropriate and helpful to the employee’s work.  Based on the given information it appears that the plastic surgery will be helpful to Sue’s work since she will earn more money, but I am not convinced the expense is considered appropriate.

According to the IRS an employee business expense must also be ordinary and necessary in order to be deductible (“Employee business expenses,” 2007).  The IRS also states that an ordinary business expense is one that is common to the type of business or career field you are in (“Employee business expenses,” 2007).  The necessary aspect comes back to our textbook definition and is defined as an expense that is helpful and appropriate (“Employee business expenses,” 2007).  Concerning the ordinary part of the requirement to claim this plastic surgery as a business expense I think Sue’s idea is outside the bounds of an expense that is common to all sports bartenders so I do not think it would be considered ordinary.  As I stated above, I think her idea meets one half of the “necessary” definition but not all.  Her plastic surgery would be helpful to her career because she expects to earn more money, but I do not think it is appropriate because it is not a requirement for improving her ability to do the trade of bartending.  She won’t be able to make a better drink because she gets plastic surgery.  Many of the approved expenses are either required for the job or help the person do their job better.  They often are expenses that improve the person’s job knowledge and improve their ability to do the job.  Plastic surgery would change her physical appearance but has nothing to do with her ability to do her job as a bartender.

Based on this justification and the 2014 tax laws explained in our textbook, I do not think her plastic surgery should be considered an approved employee business expense and it is, therefore, not tax deductible.

References

Employee business expenses: Getting the most out of your deductions. (2007). Central Penn

Business Journal, 23(12), 14. Retrieved from https://search-proquest-com.ezproxy2.apus.edu/docview/236259549?accountid=8289

Spilker, B.C., Ayers, B.C., Outslay, E, Weaver, C. D., Barrick, J. A., Robinson, J. R., &

Worsham, R. (2015). Taxation of individuals and business entities. New York, NY: McGraw Hill Education.

New! Re: Comer – Week 3 

William Whitley(Oct 16, 2018 2:03 PM)– Read by: 1

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Thanks for responding;

When an issue is unclear, the next step is to research court cases.   Court findings become part of the tax law.  What can you find in court cases about this issue?

New! Re: Comer – Week 3

Tremina Littlejohn(Oct 16, 2018 8:18 PM)– Read by: 1

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Last Edited By Tremina Littlejohn on Oct 16, 2018 8:19 PM

Initially thought the same thing, No this can not be a deduction. After researching further, I found a article fro 5 years that I have summarized below and which was part of forum.

However, Cynthia Hess was an exotic dancer with stage name “Chesty Love.” She was able to get the United States Tax Court to uphold a deduction for surgical implants to enlarge her chest. When Cynthia first started dancing, she was getting many gigs, however the pay-out was very small due to a hereditary deficiency. To elevate her earnings, her agent convinced her to enlarge her breast to 56FF initially but ultimately, she enlarged them to 56N.  Enlarging her breast, immediately spike her earnings. She filed her deductions with the IRS and of course, they contested because of the rules outlined in Publication 502. However Special Trial Judge Joan Pate sided with Cynthia, saying the breasts were a “necessary business assets and necessary as a stage prop.” The main reason he sided with Cynthia was being the enlargement was for the sole purpose of making more money and not personal appearance. The judge associated the breast enlargement with uniforms. In order for uniforms to be deducted, they must meet two criteria’s. The first requirement is it must be a condition of employment and the second is it is unsuitable for everyday use. The final decision cited but Judge Pate was that the implants so extraordinarily large are “useful only in her business” and therefore are deductible. Once Cynthia ended her professional career as an exotic dancer, the breast was reduced. (www.forbes.com)

Although her breast were allowed to be deducted, I still believe the deduction is a case by case basis.

Tremina Littlejohn

https://www.forbes.com/sites/peterjreilly/2012/07/20/julian-block-on-cosmetic-surgery-as-a-business-expense/#145c12736f39

 

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New! Comestic Surgery

Tremina Littlejohn(Oct 16, 2018 8:14 PM)– Read by: 1

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This question is interesting. According to the textbook, expenses that qualify include these that are appropriate and helpful for the employees work such as the cost of professional dues, uniforms (unless suitable as normal attire) union dues, and subscriptions to publications related to employment. This lays out nothing about plastic surgery. The answer is not so cut and dry (pg. 6-26)

When researching the IRS publications, I came across a few interesting excerpts from Publication 502 about cosmetic surgery. “Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. This includes any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease (http://www.irs.gov).”

So, from this excerpt and the expenses provided by the book, one would assume the answer may be No because the surgery is not medically necessary.

However, Cynthia Hess was an exotic dancer with stage name “Chesty Love.” She was able to get the United States Tax Court to uphold a deduction for surgical implants to enlarge her chest. When Cynthia first started dancing, she was getting many gigs, however the pay-out was very small due to a hereditary deficiency. To elevate her earnings, her agent convinced her to enlarge her breast to 56FF initially but ultimately, she enlarged them to 56N.  Enlarging her breast, immediately spike her earnings. She filed her deductions with the IRS and of course, they contested because of the rules outlined in Publication 502. However Special Trial Judge Joan Pate sided with Cynthia, saying the breasts were a “necessary business assets and necessary as a stage prop.” The main reason he sided with Cynthia was being the enlargement was for the sole purpose of making more money and not personal appearance. The judge associated the breast enlargement with uniforms. In order for uniforms to be deducted, they must meet two criteria’s. The first requirement is it must be a condition of employment and the second is it is unsuitable for everyday use. The final decision cited but Judge Pate was that the implants so extraordinarily large are “useful only in her business” and therefore are deductible. Once Cynthia ended her professional career as an exotic dancer, the breast was reduced. (www.forbes.com)

 

https://www.forbes.com/sites/peterjreilly/2012/07/20/julian-block-on-cosmetic-surgery-as-a-business-expense/#145c12736f39

http://www.irs.gov/publications/p502/ar02.html#en_US_2013_publink1000179043

Spilker, B.C., Ayers, B.C., Outslay, E, Weaver, C. D., Barrick, J. A., Robinson, J. R., &   Worsham, R. (2015). Taxation of individuals and business entities. New York, NY: McGraw Hill Education.

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