Sunday, February 9, 2014

Game Offers Tax Advice To Rappers: Write Off Strippers, Sneaks And Medical Marijuana

The Game may be a successful rapper but his tax advice leaves a little bit to be desired.

Born Jayceon Terrell Taylor, Game was discovered by Dr. Dre in 2003. His debut album "The Documentary" went on to sell over five million copies, reaching double platinum status. Since then, Game has gone on to be nominated for two Grammy awards and a number of Billboard Music Awards.

So, when it comes to music, he knows his stuff. When it comes to taxes? Maybe not so much. You see, Game was out last night in Los Angeles when he was asked a few questions by the paparazzi about taxes. His response?

"Taxes? You can write off d*mn near anything, man."

When prompted to "name the top three things" that rappers could write off on the taxes, Game had these answers:

"You can write off strip clubs… making it rain." "Buying Jordans." "You can write off buying medical marijuana."

You can see the whole exchange here.

As always, Game is entertaining. Only he's not exactly right.

To claim a deduction for business expenses, the Internal Revenue Service requires, at Section 162 of the Tax Code, that it be "ordinary and necessary." According to the IRS, an ordinary expense is one that is common and accepted in your trade or business. I suspect that paying a stripper is pretty ordinary in the entertainment/rap business… but is it necessary? The IRS defines a necessary expense as "one that is helpful and appropriate for your trade or business." Patronizing a strip club might be helpful and appropriate for his image so it might be possible to write off club entry fees (I said might) but those dollars for dances? The IRS is going to argue those expenses are entirely personal. And "making it rain" – the act of showering a stripper with dollars – is fairly expensive: remember that you cannot deduct expenses that are lavish or extravagant.

But back to that entry fee and other club-related expenses. Could any of that be deductible as a business expense? Entertaining a client or having a meeting at the club could be deductible as entertainment expenses so long as the primary purpose is business. The expenses must meet also either the associated test or the directly-related test:

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