MLR

Deducting ‘body work’ depends on paperwork

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According to Forbes, NFL linebacker James Harrison of the Cincinnati Bengals spends upwards of $500,000 annually on training, massage and other body work. As a point of reference, Harrison earned more than $9 million in 2012 as a member of the Pittsburgh Steelers.

The logical question arises: Can Harrison deduct his $500,000 of annual body work costs on his tax return?

First, consider the fact that Harrison is an employee of the Cincinnati Bengals. The tax law allows a deduction for the ordinary and necessary expenses paid or incurred in carrying on a trade or business, including the trade or business of being an employee.

An employee may deduct as an “other miscellaneous deduction” certain unreimbursed employee expenses. Unfortunately, the deduction for unreimbursed employee expenses, as well as other miscellaneous itemized deductions, is limited to the amount that exceeds 2 percent of the taxpayer’s adjusted gross income.

In 1965, the Tax Court allowed Sugar Ray Robinson to deduct payments made to training partners and trainers (in the form of free tickets), fees paid to Robinson”s manager and costs incurred to rent a training camp facility.

Later, in three separate decisions (Stemkowski, Hanna and Bailey), the Tax Court concluded that off-season conditioning costs of professional hockey players should also be deductible as unreimbursed business expenses.

Perhaps the biggest hurdle facing Harrison in claiming deductions for his condition work, however, is one of substantiation. In the three hockey cases cited above, the Tax Court, while agreeing that off-season conditioning costs would be deductible, ultimately denied the deductions because the taxpayers failed to keep accurate records.

If Harrison claimed these expenses as deductions, let’s hope he kept the receipts.

If winning isn’t everything, why do they keep score?” – Vince Lombardi