Last night at the end of blackish, Lawrence Fishburne’s character is talking to James Brown, a sleazy accountant. Brown tells him if he sews the pockets of his trousers shut, it becomes a costume. If he wears a costume for at least 5 minutes on stage, he can claim to be a performer and write it off as a business expense. Fishburne replies, “Let’s make it 10 minutes then, and take care of two fiscal years.”
Of course this is BS, but how much of it is truth? Are pants without pockets considered costumes, and is there a minimum time to be on stage and be able to claim your occupation is a performer?
My recollection is that Johnny Carson won a dispute with the IRS over the tax deductibility of scads of sports jackets that he wore on the Tonight show. It was because the pockets were sewn shut, thus rendering them ill-suited for normal everyday use.
is there a minimum time to be on stage and be able to claim your occupation is a performer?
I don’t see how you can claim anything as an “occupation” unless you’re getting paid to do it. Can you claim to be an actor (tax-wise) if you’ve never been paid as one?
What if you’re an understudy who never has to fill in for the main actor? Do you even get paid? Are you classified as an actor even though you didn’t act?
Lots of people have businesses that lose money; they’re still entitled to deduct (legitimate) business expenses.
That said, the situation in the OP is obviously for comedy purposes. I’m certain that if someone tried this and the IRS investigated, they would determine that merely standing on a stage for five minutes does not constitute an actual business situation.
The IRS has pretty wide latitude and can declare something to be a hobby rather than a business. For a hobby, expenses are deductible only to the extent of income derived from the hobby. As I recall one test of being a business was showing a profit in at least 2 of the last 5 years.
I also recall s story when some singer (I’m thinking Dinah Shore) claim a bunch of dresses as a business expense. She told the auditor she couldn’t even sit down in some of the dresses. She was allowed to claim those as business expenses.
Being self-employed, I have some familiarity with IRS rules regarding business deductions. (But I’m certainly no authority.) One point I remember is that you can claim clothes as an expense only if they are solely for work and not worn otherwise. So for example, a welder who has to wear fireproof pants to work or a police officer who has to pay for his own uniform could deduct those expenses. Even if I’m required to wear a nice business suit for my work, I can’t deduct that because it can be worn aside from work purposes.
So I suppose the joke was that if you sew the pockets shut, you could argue that the suit is not suitable for everyday wear. Obviously not something I’d want to defend in an audit.
The other question would fall into the hobby vs. occupation question for the IRS. IIRC, you have to show you’ve received income from the activity even if your net result was a loss. Thus, an actor who gets paid but never makes more money than he spends on his business expenses could still claim that occupation. How long you stand on stage isn’t relevant; it’s whether they paid you to stand there.
The advice from the sleazy accountant is the kind of thing that we self-employed people think about a lot. Can I get away with saying that new television was a business expense for use in my home office? It would be legit if it really were for my office, so nobody will question it, right? For me at least, the decision usually comes down to whether I could keep a straight face trying to explain that to an IRS auditor. And that’s why I play it pretty safe and don’t bother sewing the pockets of my trousers shut.
You know, it’s not uncommon for regular non-costume suit jackets to have their front pockets sewn shut (with loose and easily removable stitches, true, but still sewn shut). I’ve bought at least one that way.
The idea is that carrying anything in the front outer pockets of your suit jacket will make the jacket hang funny from the weight and could eventually stretch out the pockets so they bulge strangely even when empty. So many suit makers remind their clients of that by lightly sewing the pockets shut – the purchaser can take out the stitches and use the pockets, but it’s clearly at their own risk as far as making the jacket look bad.
IIRC the test I’ve heard in Canada for a business is “reasonable expectation of a profit”. Lots of new startups try to make a go and fail. So you can demonstrate to the tax people, my little farm could produce enough to sell for a reasonable profit, with normal yields if it weren’t for the drought. However, if the only way it ever would break even is if you skipped deducting some expenses one year (don’t deduct seeds, fertilizer, and tractor maintenance), then it’s a hobby. For things like cars, they expect you to keep a log, and claim expenses (gas, maintenance, etc.) in proportion to the mileage related to work activity vs. personal.
One of the annoying silly things I ran across many years ago, software was considered a capital investment. You had to depreciate it over several years, since some applications cost thousands of dollars.
I assume some businesses do try to deduct the big-screen TV. Obviously something like an iPhone or tablet has a better chance of being considered a “business” item.
So I assume the OP’s accounting advice was just a joke, an example of a sleazy accountant doing his thing.
I remember once seeing dancer/actor extraordinaire Ann Miller on a Mike Douglas-type talk show waaay back when. She performed in a glitzy/skimpy dance outfit. (Like in this video, but with a lot more sparkles on it.) After the number, a lean back board was brought out so she could rest standing up while being interviewed. She was asked about the board. She said the costume was designed so she couldn’t sit down and thus was tax deductible.
I have no idea who would question such an outfit as being for anything other than her job.
This wasn’t the only instance of “being unable to sit down” that I saw in this context.
They sew up the vents in the back too, and the boutonniere buttonhole. I thought sewn pockets/vents/buttonholes was more about having the suit hang right on a mannequin or hanger in the shop, and less about a “use pockets at your own risk” message from the manufacturer. They probably don’t really care what you do with your clothes once they’ve got your money, they’re just doing it to help sales. Or at this point, just because it’s expected.
Well, it’s not like I was told this directly by a suit manufacturer, so I could well be wrong, and would be happy to hear from someone in the know.
But I do think that old-school high-end tailors and also more modern high end branded designers do care about what their suit looks like as you wear it around. They want potential future customers to look at you and say “Nice suit, where did you get it?”, not “Dude, your suit looks baggy; you should get a different tailor”.
I’ve seen the pockets sewn shut on a jacket as style advice a few times. The idea may have been borrowed from the stage. If they come sewn shut they don’t stay that long with me. I can’t abide a virgin pocket.
