Louella was born into a low-income family and lives in a poverty-stricken neighborhood. She recently landed a job as wardrobe consultant at High Fashions Ltd., a retailer of expensive women’s clothing at an Elm Grove shopping mall. The employee manual at High Fashions makes it clear that employees should wear not only fashions of the type available in the store but “careful attention should be paid to wearing the latest cutting-edge fashions whether they have met with commercial success or not.” In addition, under the theory that certain colors are more flattering than others, Louella has been instructed to wear clothes that are primarily shades of black or grey each day. Louella takes her job seriously and wears the latest in black or grey haute couture whether she likes the clothes or not. In fact, due to her modest upbringing, Louella only wears her work clothes while at the store and commuting to and from work. Besides, Louella believes that wearing the same color of clothes each day outside of work would be odd and it’s not “her color.” Can Louella deduct the cost and upkeep of her expensive outfits under §162 as a business expense deduction on her Federal income tax return?
Prepare a tax research memo that resolves the issue of deducting Louella’s work clothes. You will need to support your conclusion using primary sources of tax law. Your textbook is NOT primary authority.
must use proper citation form in your memo (see Chapter 2 for help with citation form). The form for this communication should be professional and in the form of a tax research memo (example posted on Blackboard and a similar example in your text on p. 2-27). Do yourself a favor and look at the grading rubric
before you submit.
This memo should be whatever length you feel is appropriate to resolve the issues. We do NOT use a bibliography or list of references in a tax research memo. You will see that citations are within the text of the document in the example. Once a court case has been cited in full, it can be referred to using simply the name in
You are required to individually prepare this document (no assistance from your classmates). Please
upload your memo into Turnitin in Blackboard by the due date at 11:30pm.
The grading rubric is posted in Blackboard. For this assignment, points are distributed as follows:
|Content – Facts||5|
|Content – Analysis||10|
|Content – Conclusion||5|