The daughter of the taxpayers in the case of Lopez v. Commissioner, TC Memo 2017-171 competed in several beauty pageants beginning at the age of nine. She won several events and received cash prizes, totaling $1,325 and $1,850 in the two years at issue in the case and her parents deposited her winnings in a savings account for her future college education expenses.

Competing in such contests require incurring many expenses, as the parents discovered. The taxpayers paid $21,732 and $15,445 of such expenses in the two years under examination. The parents did not take reimbursement for any of the expenses from their daughter’s savings accounts.