Legal News

Nothing is Certain But . . . Sarah Palin?s Wardrobe & Taxes?

By Dan Slater

Before we move on to the day’s more, um, pressing legal matters, let’s briefly discuss the sartorial fever generated by Sarah Palin’s clothing tabs. Heck, everyone else is.

For those of you who just got back from vacation, Politico reported yesterday that, since she was picked by John McCain in August, the Republican National Committee has spent more than $150,000 to clothe and accessorize veep candidate Sarah Palin and her family.

But when it comes to the merits of Valentino over Tahari, or the benefits of Cole Haan boots versus Kate Spade pumps, the Law Blog, we must admit, is pretty clueless. For the purposes of this post, we’ll also brush aside claims of sexism — would anyone bristle at a male candidate spending thousands on suits? — and get right down to that far sexier aspect of the story: tax law.

And for that we head to TaxProf blog, where the mighty oak, Paul Caron, addresses the tax implications of the RNC’s clothing expenditure for Palin by linking to a Bloomberg article in which he’s quoted. Palin earned $166,080 last year, according to her tax returns, Bloomberg reports. Under some circumstances, the IRS may consider the clothing income taxable to her, tax experts said.

“This is clearly income,” Caron tells Bloomberg. “The charitable deduction will not eliminate all, or most, of the income,” he said, referring to the credit she could receive by giving the clothes to charity.

In his post, Caron adds: “If there’s no tax consequence when the boss buys you the clothes that make the man that is the man that the boss wants to hire and the man wears the clothes anytime when not in his own home sanctuary, what’s to stop all the company executives and law firm partners from having their firms buy their clothes and letting them wear them on loan, taxfree? Surely that would be one boondoggle for the wealthy too many for American taxpayers to stomach.”

Full post as published by Law Blog - WSJ.com on October 23, 2008 (boomark / email).