Real Talk -- Is Bling a Tax Deductible Business Expense?
At Latino Tax Pro, we get some interesting inquiries through our VIP member “Ask a Tax Pro” service. Today we’re going to share a question from Sofia, who asks:
“I have a client that sings urban music and has a few songs…he is telling me that he can write off all his ‘bling bling’ gold chains and all his high-end shoes he pays $850 for and clothing such as jeans that could cost $500, etc. He says he only wears them once because ‘it is an image.’…Please let me know if this is different for entertainers when it comes to clothing and also about the gold chains."
In 2013, rap artist The Game tweeted some unconventional tax advice for other rappers: "It's tax season & since I know all you rapper(s)…got strippers, sneaks (sneakers) & medical marijuana... claim that!"
The Game's tweet was likely meant to be humorous, but it did highlight an interesting intersection between hip-hop culture and tax law. While an interpretation of the IRS rules might lead us to conclude these expenses are business-related and deductible, it’s worth looking a little deeper into the language of the tax code to determine whether these are truly allowable deductions.
The IRS does allow business-related deductions, but they must be ordinary and necessary expenses directly related to one's profession. For entertainers, certain clothing or props used exclusively for performances might qualify. However, personal expenses like recreational marijuana (even if medical) or entertainment at strip clubs typically wouldn't be deductible.
These aggressive, non-traditional deductions could invite added IRS scrutiny or even trigger an audit. The IRS has historically looked very closely at entertainment industry write-offs. While hip-hop culture often celebrates lavish spending, the tax code requires careful documentation and legitimate business purposes for deductions. The Game never mentioned whether he actually claimed such deductions himself, or whether the IRS determined they were allowable.
For entertainers, the IRS closely scrutinizes deductions for items like gold jewelry and designer sneakers. However, while some expenses might be considered excessive, they are not automatically disallowed. IRC Section 162 states that expenses should not be "lavish or extravagant under the circumstances," which does not explicitly exclude all such expenses.
IRC Section 262 bars deductions for personal living expenses, including clothing and jewelry that could be worn outside of work (even if they aren't). Items such as sneakers and jewelry are likely to be considered personal expenses unless they can be clearly shown to be necessary for conducting business, such as for a specific performance or public appearance. For example, a costume that is not suitable for everyday wear or jewelry worn solely for a music video or stage performance may be deductible.
Under IRC Section 274(a)(1)(A), entertainment expenses, including strip club visits, were significantly restricted even before the Tax Cuts and Jobs Act of 2017 eliminated most entertainment deductions entirely. Even when such deductions were allowed, they required extensive documentation showing a clear business purpose and discussion. The client would have to have met with others for business purposes and be able to document this to the satisfaction of the IRS. Among many factors, the atmosphere and distractions of a strip club would appear to make it a less-than-ideal venue for serious business discussion. On the other hand, if the strip club were used as the locale for a music video, or strippers were hired to appear in a music video, these expenses might be deductible.
Regarding medical marijuana, IRC Section 280E specifically prohibits deductions for expenses related to trafficking controlled substances. Even in states where marijuana is legal, federal law still classifies it as a Schedule I controlled substance, making related expenses non-deductible.
Publication 535 (Business Expenses) further clarifies that expenses must be both "ordinary and necessary" in the taxpayer’s trade or business. "Ordinary" means common and accepted in your field, while "necessary" means helpful and appropriate. Casual strip club visits and personal sneaker collections would most likely fail this test.
While The Game gave out his advice 12 years ago, rappers are continuing the tradition of offering tax advice to the community. Last December, rapper Lil Baby, who had for two years neglected to file a tax return, said, on Lil Yachty’s podcast, “Bro I done got over $100 million from labels and deals. Not one time, nobody – and they still haven’t – told me how to pay my taxes. Nobody never even told me to pay my taxes. I just always knew from being around hearing people have tax problems.” He then went on to suggest tax strategies for other rappers.
While a rapper's "bling" can potentially be deductible, these expenses must meet the stringent IRS criteria of being specifically required for the job, not lavish or extravagant, and not suitable for everyday wear.
This points up the need for the tax preparer to always do their due diligence, and to fully understand each client’s specific situation. You should thoroughly interview the client to ensure the expenses meet IRS requirements, and retain all relevant documentation to substantiate these claims, before claiming them on the client’s return.
There is risk involved. The tax codes did not necessarily anticipate the implications of bling as a business expense for rappers. In the event you prepare a return for a client claiming these expenses, the IRS could reject the claim. This could result in added tax liability, interest, and even fines or other penalties for the client and the preparer if the claims were found to be unsupportable or inconsistent with tax law.
References
Meals and Entertainment Expenses Under Section 274
Travel & Entertainment - Internal Revenue Service
Lil Baby Now Helps Rappers With Finances After Having Tax Trouble | HipHopDX
Game Offers Tax Advice To Rappers: Write Off Strippers, Sneaks And Medical Marijuana
The information provided in this article is for general informational purposes only and does not constitute professional tax advice. Readers are encouraged to conduct their own research and consult with the IRS, other tax professionals, and relevant references such as the tax code when determining a course of action in any tax matter. Tax laws and regulations are subject to change and interpretation, and individual situations can vary significantly. Therefore, the applicability of the information in this article may differ based on individual circumstances.
