You Be the Tax Judge: Can An Influencer Deduct Celebrity Experiences?

These days, being a social media influencer can be big business. And like other business owners, influencers may be able to deduct ordinary and necessary business expenses.

But what happens when the business expense is also something most people would consider fun?

Suleiman Sami operated several businesses, including a social media influencer business. Over several years, he built substantial followings on platforms including TikTok and Instagram.

As part of his efforts to create content and attract attention online, Sami spent money attending high-profile events and meeting celebrities.

Among his purchases were:

• $10,000 for two Grammy tickets
• $2,700 for two Emmy tickets
• $8,912 for an experience with Benedict Cumberbatch
• $4,151 for an experience with Matt Damon
• $2,600 for an experience with Mark Ruffalo
• $2,025 for a personalized video from Chris Evans
• $6,500 for Tiger Woods’ Tiger Jam
• $831 for the chance to catch a pass from Drew Brees
• $779 for the chance to return a serve from John McEnroe
• $425 to train and have lunch with Chuck Liddell

There were other celebrity experiences, too, including opportunities involving Tom Brady and Tom Holland.

Sami didn’t simply attend the events and go home. He took photos and videos and posted content from his experiences on social media. He argued that celebrity-related content attracted attention to his accounts, increased his visibility, and helped build his following.

And there’s no question that social media can be a business. Influencers make money precisely because people watch, follow, and engage with their content. Creating content that attracts an audience can therefore have real commercial value.

But the tax law doesn’t automatically turn an expenditure into a business deduction simply because someone posts about it online.

Section 162 of the Tax Code generally allows taxpayers to deduct ordinary and necessary expenses paid or incurred in carrying on a trade or business.

No matter the industry, the IRS uses that standard. Here’s what it means:

• An ordinary expense is one that is common and accepted in your industry. It’s the one time that you care about what your competitors are doing. No matter what your mother says, it does matter whether everyone else is doing it, too.
• A necessary expense is one that is helpful and appropriate for your trade or business. You don’t have to prove that you couldn’t be in business without the expense—more or less, it needs to make good business sense.

For an expense to be deductible, it needs to be both.

It complicates matters when an expense has both business and personal elements. Importantly, simply getting some business benefit from an expense doesn’t automatically make the entire cost deductible. Conversely, a legitimate business expense that also provides some personal enjoyment or benefit doesn’t necessarily disqualify the deduction.

So here’s your case.

Sami says these celebrity experiences helped him create the kind of content that attracts followers and builds an influencer business. The IRS says the costs aren’t deductible business expenses.

You be the Tax Judge. Make your ruling before you read what the Tax Court decided.