Paul L. Caron
Dean



Thursday, October 8, 2020

NY Times: Trump Took $70,000 In Tax Deductions For Hair Care. Experts Say That’s Illegal.

New York Times, Trump Took $70,000 in Tax Deductions for Hair Care. Experts Say That’s Illegal.:

There were many bombshells in The New York Times’s exposé last week about President Trump’s taxes. He has paid basically zero federal income tax for years. His much-ballyhooed businesses are on the ropes. And that was just the headline.

But it was a juicy and seemingly less significant matter that jumped out at me: Mr. Trump spent more than $70,000 on hairstyling during several years of his run on “The Apprentice,” his reality-TV show.

That, of course, is quite a lot for any one person to spend on having his hair cut, blow-dried or colored. But what is really remarkable about the revelation is that Mr. Trump’s production company deducted his hairstyling expenses from its taxable income, reducing its tax bill.

Tax experts told me that deducting what is ordinarily considered a personal expense is prohibited under almost any circumstances. And they said such a deduction could potentially constitute criminal tax fraud if the cost of the hairstyling was reimbursed by someone else. ...

In 2011, the U.S. Tax Court heard a case involving a news anchor at the NBC affiliate in Columbus, Ohio, who deducted her hair-care expenses on the grounds that her job required it and that she was a full-time ambassador for the station. The court flatly rejected the claim. Expenses related to “grooming” are “inherently personal expenditures,” the court held, even though “these expenses may be related to her job.” ...

Whether these deductions were merely aggressive or illegal would ordinarily be the subject of I.R.S. audits. Mr. Trump has said he remains under audit, and The Times reported that one focus is a $72.9 million refund that he claimed and received. It is not clear whether the I.R.S. has examined the Trump family’s hair-care deductions. ...

Compared with Mr. Trump’s billion-dollar losses, which offset any profits, $70,000 in dubious hair-care deductions might seem trivial. But they are emblematic of his overall approach to taxes: No amount is too small to withhold from the government’s coffers.

(Hat Tip: Ted Seto.)

https://taxprof.typepad.com/taxprof_blog/2020/10/ny-times-trump-took-70000-in-tax-deductions-for-hair-care-experts-say-thats-illegal.html

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Comments

On their 2019 tax return, Kamala Harris and her husband Douglas Emhoff deducted $13,503 of vehicle expenses and $4,043 of meals expenses as unreimbursed expenses related to his work with law firm DLA. In my experience, big law firms like DLA reimburse their partners for any legitimate business expenses such as travel and meals. Are these really business expenses? Or is this an attempt to deduct personal vehicle and meal expenses? There's another topic for the NY Times to investigate, if they are really interested in transparency and protecting the government coffers.

Posted by: Apolitical Tax Enforcer | Oct 8, 2020 5:16:18 AM

Experts have also argued that the President exercising his delegated constitutional powers was illegal. Experts have also argued that the President exercising his 1st Amendment rights was illegal. Experts have also argued that the President was a Kremlin agent who stole the 2016 election.

Experts have a long track record in conspiracy theories and lowering the legal standard to claim actions many other presidents have taken are now illegal.

Posted by: MM Classic | Oct 8, 2020 9:14:57 PM

With 192 episodes of The Apprentice, that's $365/episode for hair styling. I would think that TV shows can deduct hair styling, like make-up, as a cost. Is $365/episode unusual for TV shows for hair? Must the company pay union rates? Without a comparison to other TV shows, nobody should say this is an illegitimate expense.

Posted by: Eric B Rasmusen | Oct 10, 2020 9:04:59 PM

If I combed through Tax Court cases that I remember from a misbegotten youth, there are quite a few cases where (broadly) entertainers attempted to deduct clothing and other cost of “appearance.”

Although these were generally unsuccessful, I recollect none that involved criminal tax fraud. I agree with MM Classic – find another expert.

Posted by: aircav65 | Oct 11, 2020 8:10:58 AM

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