Taxes and Strippers, Part II
Recall from last month my tale of a New York strip club’s attempt to avoid paying taxes on income from lap dances.
(maybe that should read ‘tail,’ since we’re talking about strippers . . . but I digress . . .)
The subject for today’s edition of ‘Taxes and Strippers’ comes from the TaxProf Blog, which addresses whether or not “makin’ it rain” (look it up if you don’t know) at the strip club is tax deductible. According to blog editor, and legit law / entrepreneurial tax scholar / way smarter guy than me, Paul L. Caron makin it rain could be deductible if:
1. ENTERTAINMENT EXPENSES. These costs could be deducted if the rapper is entertaining a client, customer or employee and the expense is not “lavish or extravagant.” So it might be hard for Drake to justify dropping 50K in a club, but another rapper who lets a grand fly would have a much better argument.
2. ADVERTISING OR PUBLICITY. These expenses could be deducted if they are “reasonable … and are directly related to [the rapper's] business.” Funny thing … a lot of rappers say making it rain is something they have to do to build their image so people will buy their records, so as crazy as it sounds, they may have a leg to stand on.
Where Dr. Caron limits his analysis to rappers, I’d imagine these criteria apply to anyone. “No, IRS person auditing me, I didn’t spend $1,000 on strippers for my cousin Fred after his old lady kicked him out. I was entertaining a potential client, as Fred was thinking about buying my lawnmower.” Something to think about as you look for deductions in 2013.