Tax Court Case Summary

The Commissioner of the IRS appealed the decision of the US Tax Court in regards to a business expense deduction for clothing expenditures by the defendant in the taxable year 1975. The defendant, Sandra Pevsner, taxpayer, had been working as a manager at the Sakowitz Yves St. Laurent Rive Gauche Boutique (YSL), a shop for highly fashionable and expensive women’s apparel. As a manager of the shop, she was expected to wear the YSL clothes and project the image of an exclusive lifestyle while at work. In 1975, the defendant purchased $1,381.91 in clothing and accessories and expended an additional $240 for maintenance on these items. Though the items sold by the boutique were used for everyday wear by the customers of the shop, the taxpayer was not a normal buyer of these clothes and accessories, as they were considered too expensive and unsuitable for her modest lifestyle.

Issue:

Is the cost of buying and maintaining the YSL clothing worn by the taxpayer deductible as an ordinary and necessary business under Section 162(a)?

Holding:

The cost are not deductible as ordinary and necessary business expense.

Reasoning:

Clothing costs are generally only deductible as a business expense if: “(1) the clothing is of a type …show more content…
As the commissioner states, “the price one pays and the styles one selects are inherently personal choices governed by taste, fashion, and other unmeasurable values.” A subjective test provides no guidelines in determining what kind of clothing are deductible. Two people who brought the same clothing can have different tax results based on their lifestyle and “socio-economic level,” a situation the court would like to