Taxpayer Bieber’s new sweater

Photo from New York Daily News

According to Huffington Post, The Bieb’s new sweater (above) cost $1,650.  While I prefer argyles, I’m happy for him.  Let’s analyze the propriety of this expense.

First of all, is it tax deductible?

The law is unclear.  Clothes that can be worn on the street are problematic – and not a good idea to deduct. This has got to be one of the most frustrating aspects of being a megateen-star, like Taxpayer Biebs, not knowing what you can and cannot deduct from your taxes.

For tax purposes, let’s be conservative and say it’s not tax-deductible.  The sweater is really going to cost $1,650.

Should he have bought it?

The question when deciding whether to incur expenses is: will the benefits exceed the cost?  The mere price of his sweater got his picture all over the internet and into newspapers this morning.  It would be hard to buy so much publicity for $1,650.

Should Mr. Porter have comp’d Biebs the sweater?

We’re assuming that Taxpaper Biebs actually paid for the red-wool-snowflake-with-leather-sleeves sweater.  However, Mr. Porter could have comp’d Biebs the sweater.  In this case, Mr. Porter can deduct the cost of the sweater (not the retail price), and it should be taxable income for Biebs.  Mr. Porter, a retailer I never heard of, probably earned at least $1,650 worth of publicity out of this one.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: