The Pevsner v. Commissioner Test for Clothing Deductions

Deducting the cost of work-related expenses is a common practice for taxpayers, but the area of clothing often creates confusion. While the Internal Revenue Code allows for deductions of “ordinary and necessary” business expenses, applying this standard to apparel has proven contentious. The line between a personal clothing choice and a required work uniform can be blurry. The United States Court of Appeals for the Fifth Circuit provided a decision in Pevsner v. Commissioner, which established a test for determining when the cost of work clothes is a legitimate business deduction.

Background of the Dispute

The controversy in Pevsner v. Commissioner centered on Sandra Pevsner, the manager of the Yves St. Laurent (YSL) Rive Gauche boutique in Dallas, Texas. The boutique exclusively sold high-fashion, expensive women’s clothing and accessories designed by YSL. As part of her employment, Pevsner was expected to wear YSL apparel at work to project the exclusive and fashion-forward image of the brand. This was an understood condition of her role as manager.

In 1975, Pevsner spent $1,381.91 on YSL clothing and an additional $240 on its maintenance. She then claimed this expense as a business deduction on her federal income tax return. She contended that but for the requirements of her job, she would not have purchased such expensive items. Pevsner and her husband led a simple lifestyle, and she asserted that the YSL clothing was inconsistent with her personal life and that she never wore the garments outside of work-related functions.

The Internal Revenue Service (IRS) disallowed the deduction, arguing that the clothing was suitable for general personal wear and therefore constituted a non-deductible personal expense. The initial U.S. Tax Court sided with Pevsner, applying a subjective test and agreeing that the clothes were not suitable for her specific lifestyle. The Commissioner of Internal Revenue appealed this decision, pushing the case to the Fifth Circuit for a ruling with lasting implications.

The Court’s Objective Test

The Fifth Circuit Court of Appeals reversed the Tax Court’s decision, establishing an objective test to govern the deductibility of clothing expenses. The court moved away from considering the taxpayer’s individual lifestyle or personal preferences. Instead, it instituted a three-part standard where all conditions must be met for the expense to be deductible.

The first condition of the test is that the clothing must be required as a condition of employment. In Pevsner’s case, the court acknowledged this condition was met; the Commissioner stipulated that her employer required her to purchase and wear YSL apparel for her job. This involves demonstrating a direct employer mandate or a clear business necessity.

The second condition is that the clothing must not be suitable for general or personal wear. The court rejected Pevsner’s subjective argument that the clothes were unsuitable for her lifestyle, focusing instead on whether the clothes were suitable for wear by the public at large. The YSL apparel was determined to be ordinary streetwear for some members of society. Because the clothing was adaptable for general use, it failed this part of the test.

The third condition is that the clothing is not, in fact, worn for personal use. Pevsner also met this requirement, as it was stipulated that she did not wear the YSL outfits outside of her work duties. However, satisfying this condition alone is insufficient. The failure to meet the second condition—the objective suitability for general wear—was the reason her deduction was denied. The court’s ruling prevents taxpayers from deducting the cost of conventional clothing, even if their job requires a higher standard of dress than they would personally choose.

Applying the Test to Work Clothing Deductions

While the three-part test from Pevsner remains the standard for determining if clothing is a business expense, its application for individual taxpayers has been limited by recent tax law changes. The Tax Cuts and Jobs Act of 2017 suspended the deduction for unreimbursed employee expenses for tax years 2018 through 2025. This means W-2 employees cannot deduct the cost of work clothes during this period, even if they meet the test. The framework is still relevant for self-employed individuals, who can claim qualifying clothing costs on a Schedule C, and for employers who deduct the cost of providing uniforms to their staff.

For an expense to be deductible, the clothing must pass all three hurdles, with the second condition regarding suitability often being the most difficult to meet. Clothing that satisfies all three conditions includes items that are not meant for everyday wear. For example, employer-mandated uniforms featuring a company logo are not suitable for general use. Specialized protective gear, such as steel-toed boots for construction workers, flame-retardant clothing for firefighters, or sanitized scrubs for medical professionals, also qualifies.

Conversely, many types of clothing required by an employer fail the test. A law firm that requires its attorneys to wear business suits would not see those costs become deductible. While the suits are a condition of employment, they are inherently suitable for general personal wear, such as for attending weddings or other formal events. This holds true even if the individual would never purchase a suit otherwise and never wears it outside of work.