by Mitch Freedman, CPA, PFS
If a production company requires an actor to have cosmetic surgery in order to play a role, who gets the tax deduction, if any? If the actor pays for the surgery, will he get the deduction? If the production company pays, does it get a deduction?
As an adviser for many decades to performing artists and production companies, I have never come across a scenario in which a production company required an actor to have cosmetic surgery. Usually the production company would merely cast an actor with the physical traits that they were looking for. I have seen many situations, however, in which an actor was told to gain weight, lose weight, or wear an appliance of some kind. That being said, the rules and regulations to deduct expenses related to physical appearance enhancement are murky. Tax Court cases give guidance, but they too are not definitive.
For example, if the surgery was something on the order of liposuction, it would be difficult to justify because it would enhance the general appearance of anybody. If a sagging former body builder or action hero needed pectoral implants in order to maintain his physical appearance to qualify for those kinds of roles, however, that may qualify. There is a landmark case in which a woman obtained enormous breast implants. They were so large that they were clearly abnormal. She "needed" them to maintain her career as an exotic dancer. She testified that she would have the implants removed after her career was over, and the court believed her. So she got the deduction.
To be deductible, an expense must be considered both ordinary within the industry or profession (i.e., such expenditures are typically taken by people or businesses) and necessary (i.e., the person or business requires the expenditure to continue to be profitable). Let's assume that the cosmetic surgery is deemed ordinary and necessary and thus deductible. Under those circumstances, the person or entity who paid for it would get the deduction. If the production company paid for it, it would get the deduction. But the surgery must be ordinary and necessary to the recipient of the surgery; otherwise, it might be taxable compensation to the receiver of the surgery. If it is ordinary and necessary to the actor and paid for by the actor, the actor would get the deduction.
Regardless, the person would be wise to consult with his or her CPA about the possible tax consequences before agreeing to such surgery.
Mitch Freedman, CPA, PFS, is principal of Mitchell Freedman Accountancy Corp. in Woodland Hills, Calif. You can reach him at (805) 409-0250(805) 409-0250.
Have a question for a CPA? Ask it here.
In accordance with IRS Circular 230, the information on this website is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.