Deductibility of Halloween Costumes

Jim Maule, Unmasking the Deductibility of Halloween Costumes:

A few weeks ago, an email came my way that opened with this question: “Can you deduct the cost of your Halloween costume as a business expense?” It then answered the question:

No, if you bought it to go trick-or-treating with your kids.

Yes, if you bought it to attend a client's Halloween party.

For both? Then proportion the cost based on % of use.

You can find this question and answer on the web at Ways Through the Maze: A Tax Guide for Indies.

Though I agree with the first part of the response, I recoil in horror at the second. Unquestionably there is no deduction if the costume is purchased for a Halloween outing with the children. But if the purchase is for a client’s party, the answer depends on whether the cost of attending the party is an ordinary and necessary expense of carrying on a trade or business. And that means that the third part of the response, dealing with percentage of use, requires a more sophisticated determination than simply hours at a party compared to hours with the children, but rather a comparison of deductible use versus non-deductible use. …

[I]f a costume is purchased for use at a Halloween party, the taxpayer doesn’t have a ghost of a chance when it comes to deducting the cost. Hopefully, people aren’t goblin up the advice being shared by those who claim that the cost of a Halloween costume purchased for use at a client’s party is deductible.

About the Author

Paul Caron

Paul Caron was named Duane and Kelly Roberts Dean of Pepperdine University School of Law on June 1, 2017. Dean Caron joined the Pepperdine faculty in 2013 after serving as the Dorothy and Leonard Straus Distinguished Visiting Professor of Law in the spring semesters of 2010 through 2013. He served as Associate Dean for Research and Faculty Development at Pepperdine in 2015-2017. Before coming to Pepperdine, he was Associate Dean of Faculty and Charles Hartsock Professor of Law at the University of Cincinnati College of Law.

5 responses to “Deductibility of Halloween Costumes”

Woody

October 31, 2009

The devil’s in the details.

mike livingston

November 1, 2009

Is that you Paul? I always knew.