Press Room: Article
Business or Pleasure? The Red Flag Deductions of the Entertainment Industry
Entertainers undoubtedly incur many expenses in their industry, but the divide between personal and business motives is not always clear.
In our previous issue of For the Record, we briefly discussed tax planning issues for individuals in the entertainment industry.This issue will focus on the areas of audit exposure that such individuals face—the areas that raise red flags to Internal Revenue Service (IRS)—namely, the attempts at claiming excessive deductions and expenses. Due to the complexity and uniqueness surrounding these attempts, IRS’ Market Segment Specialization Program (MSSP) has issued guidelines to assist IRS examiners in scrutinizing and denying deductions unless they meet stringent requirements.