Just because you post your brunch with a celebrity on Instagram doesn’t mean the IRS will let you write it off. If the main reason you spent the money was personal, it’s not a business expense—no matter how many followers you pick up.
Holding
The Tax Court took one look at Suleiman Sami’s expense list—celebrity selfies, award shows, charity galas, streaming subscriptions, the works—and said, nice try. Posting about your run-in with Benedict Cumberbatch doesn’t magically turn it into a business deduction. The court did let him keep some transportation costs, credit card fees, a slice of his phone bill, and the QBI deduction. But the accuracy penalty? That stuck too.
Why It Matters
The court didn’t buy the influencer special pleading. Regular business expense rules still apply, even if your ‘business’ is posting about your VIP lifestyle. Just because you can monetize your personal life doesn’t mean the tax code suddenly gets more generous.
The key question: Why did you spend the money in the first place? If it was mostly for yourself, the fact that you later got more followers or engagement doesn’t turn brunch with Matt Damon into a business write-off.
This is a recurring headache for influencers: when your ‘business’ is basically living large, it’s hard to convince the IRS that your spending isn’t just personal consumption with a filter slapped on. Just because something is vaguely business-adjacent doesn’t make it deductible.
The court also floated the idea that if you’re spending before your influencer gig actually makes money, maybe those are startup costs, not regular business expenses. But Sami didn’t have the paperwork to even argue that point, so the court left it hanging.
This case is also a recordkeeping clinic. When Sami actually kept trip logs for his driving business, he got the deduction. When he just waved around credit card statements with no details, the court shrugged. If you can’t show what you bought or why it mattered for your business, good luck.
Key Facts
Suleiman Sami worked full-time in JetBlue’s IT department from 2019 through 2021. He also operated S Sami Services LLC, a single-member LLC treated as a disregarded entity for federal income tax purposes.
Sami described the business as having three components:
transportation services;
resale of event tickets; and
social media influencing.
He reported the combined activities on Schedule C.
S Sami Services reported gross receipts of $169,532 for 2019, $93,229 for 2020, and $133,252 for 2021. Most, if not all, of those receipts came from transportation services. Some may have come from ticket sales. None came from social media influencing during the years before the Court.
By October 2025, Sami had approximately 520,000 TikTok followers, 140,000 Instagram followers, and 4,200 followers on X. He testified that he later earned about $25,000 annually from social media advertising revenue sharing. The record did not establish how many followers he had from 2019 through 2021.
Sami spent significant amounts on celebrity encounters and exclusive events. Among other expenditures, he paid:
$10,000 for two Grammy tickets;
$2,700 for two Emmy tickets;
$8,912 for an interaction with Benedict Cumberbatch;
$4,151 for an interaction with Matt Damon;
$2,600 for an interaction with Mark Ruffalo;
$2,025 for a personalized Chris Evans video;
$6,500 to attend Tiger Jam 2019;
$831 to catch a pass from Drew Brees;
$779 to return a John McEnroe serve;
$425 for training and lunch with Chuck Liddell; and
$6,317 for signed Kobe Bryant game-issue shoes.
He also paid for other celebrity and sporting experiences, including an opportunity to catch a pass from Tom Brady.
Sami generally purchased these experiences through charities. He originally claimed many of the payments as charitable contribution deductions. After the IRS disallowed them, he changed his position and argued that they constituted marketing expenses for his business.
He photographed or recorded many of the experiences and posted the content on social media. He testified that some posts increased attention to his accounts and generated inquiries from users interested in similar celebrity experiences.
The IRS determined deficiencies of $63,219 for 2019, $27,421 for 2020, and $39,910 for 2021. It also determined 20% §6662(a) penalties of $12,644, $5,484, and $7,982, respectively.
Statutory and Regulatory Framework
Section 162(a) allows a taxpayer to deduct ordinary and necessary expenses paid or incurred in carrying on a trade or business. Section 262(a) generally prohibits deductions for personal, living, and family expenses.
An expense with both business and personal characteristics must be primarily undertaken for business purposes to qualify under §162.
Section 274(d) imposes heightened substantiation requirements for specified categories of expenses, including certain listed property. When §274(d) does not apply, the rule from Cohan v. Commissioner permits a Court to estimate a deductible expense if the taxpayer proves that a deductible expense occurred and supplies a reasonable evidentiary basis for estimating the amount.
Section 195 generally requires capitalization of startup expenditures incurred before an active trade or business begins, subject to the deductions permitted under that section.
Section 199A allows eligible taxpayers a deduction based in part on qualified business income from a qualified trade or business.
Arguments
Taxpayer argued:
The celebrity encounters, entertainment events, and charitable event purchases were treated as marketing expenses because he used them to create social media content.
Celebrity content increased views, followers, and user engagement, and could eventually increase advertising revenue.
Comparable social media influencers routinely pay to attend events, premieres, and similar experiences to create content.
His transportation records supported substantial vehicle expenses even though he had not recorded exact mileage.
His phone, streaming subscriptions, and other expenses supported his transportation, ticket resale, and social media activities.
His Schedule C income qualified for the §199A deduction.
The IRS failed to establish proper supervisory approval for the 2019 and 2020 penalties.
He had reasonable cause and acted in good faith regarding the disputed tax positions.
Government argued:
Sami failed to establish that many claimed expenses had a business purpose.
Bank and credit card statements established that payments occurred but generally did not establish what Sami purchased or how the expenditure related to his business.
The celebrity experiences and entertainment expenditures were personal rather than ordinary and necessary business expenses.
Sami failed to satisfy the applicable substantiation requirements for numerous deductions.
The §6662(a) penalties were properly approved and applied.
Court’s Reasoning
The celebrity experiences were primarily personal. The Court focused on Sami’s purpose in purchasing the experiences rather than on their potential later effect on his social media accounts. Grammy tickets, celebrity encounters, sporting experiences, and similar purchases offered obvious personal enjoyment, prestige, or status. The Court found that those personal motives predominated.
Generating useful content did not make a personal expense deductible. Sami showed that some celebrity posts produced attention and engagement. The Court found that insufficient. A personal expenditure can generate useful business material without being treated as a business expense. The relevant question remained why the taxpayer primarily incurred the expense.
Influencers remain subject to ordinary §162 rules. The Court stated that a social media influencer business is no different from another for-profit enterprise for purposes of applying the general business-expense rules. An expense commonly incurred by influencers still must satisfy §162.
The timing of the influencer activity created an additional problem. Sami earned no social media advertising revenue from 2019 to 2021. The Court observed that if the disputed expenditures represented costs of developing a future revenue-producing social media business, they could constitute startup expenditures governed by §195 rather than currently deductible §162 expenses. The Court did not resolve that issue.
Sami did not adequately substantiate most claimed marketing expenses. His bank and credit card statements often contained only merchant names, payment processors, usernames, or transaction numbers. They generally did not identify what he purchased, establish a business purpose, or connect a specific purchase to particular social media content.
General marketing expenses failed for the same evidentiary reason. Charges involving PayPal transfers, events, ticket vendors, Cameo, music purchases, and services that appeared to increase social media follower counts lacked enough documentation for the Court to determine which expenses were business-related.
Television and streaming expenses remained personal. Sami claimed that subscriptions including DirecTV, cable service, Netflix, Hulu, WWE, and Apple helped him monitor entertainment trends and identify events. The Court found no sufficiently direct relationship between those subscriptions and his business.
Transportation Expenses
The transportation deductions produced a materially different result because Sami maintained substantial contemporaneous records.
He recorded individual trips on paper vouchers showing dates, customer information, starting and ending locations, fares, tolls, taxes, and total charges. The vouchers did not contain the exact mileage.
Sami later used the recorded locations and Google Maps to estimate mileage. He claimed 62,533 business miles for 2019, 20,574 for 2020, and 38,869 for 2021.
The IRS argued that the strict substantiation requirements of §274(d) applied.
The Court disagreed. Section 280F excludes from the definition of a passenger automobile a vehicle used directly in the business of transporting people or property for compensation or hire. Sami used his vehicles to transport paying customers directly. The heightened §274(d) substantiation rule therefore did not control those vehicle expenses.
The Court applied Cohan instead.
Because Sami had contemporaneous evidence of the trips but had failed to record exact pickup and drop-off addresses, the Court reduced his estimates by 20%.
It allowed vehicle deductions of:
$29,015 for 2019;
$9,464 for 2020; and
$17,414 for 2021.
The Court applied the same 80% allowance to substantiated toll and parking expenses, allowing $11,101 for 2019, $5,042 for 2020, and $35 for 2021.
This part of the opinion reinforces the distinction between imperfect records and records that are not usable. Sami’s transportation documentation gave the Court a factual basis for estimating expenses. His marketing records generally did not.
Other Expense Rulings
The Court denied $730 of the claimed 2021 cost of goods sold for event tickets. Sami showed purchases from SeatGeek and Ticketmaster but did not establish that he resold the particular tickets.
The Court denied the claimed contract labor deductions of $600, $600, and $900 for 2019 through 2021. It accepted that Sami sometimes paid relatives to drive, but lacked evidence to determine or estimate the amounts.
The Court declined additional office-expense deductions because the claimed expenditures represented supplies, and Sami had already received unchallenged deductions for supplies on the returns.
The Court allowed credit card processing fees of $10,904 for 2019, $6,749 for 2020, and $9,186 for 2021. Sami established that the charges related to customers paying for transportation and ticket purchases.
For cell phone service, the Court accepted that Sami needed at least one phone for his transportation business but found four phones and multiple service providers excessive without evidence establishing their business use. Applying Cohan, 25% of the claimed cell service expenses were allowed.
The Court denied deductions for phone equipment because Sami failed to establish that the equipment was for business rather than personal use.
Qualified Business Income
The Court held that Sami’s Schedule C income from transportation and event ticket sales constituted qualified business income under §199A.
Those activities were neither specified service trades or businesses nor services performed as an employee. The income, therefore, came from qualified trades or businesses for purposes of §199A.
The Court’s ruling on the QBI deduction was separate from its rejection of the claimed influencer expenses.
Accuracy-Related Penalties
The IRS imposed §6662(a) penalties based on substantial understatements of income tax.
Sami challenged supervisory approval of the 2019 and 2020 penalties because the manager’s signature on a penalty approval form did not contain a date.
The Court rejected that argument. The same manager had signed the 30-day letter asserting the penalties before the IRS issued the notice of deficiency. That written approval satisfied §6751(b)(1) under controlling Second Circuit precedent.
The parties agreed that approval of the 2021 penalty was proper.
Sami also asserted reasonable cause and good faith under §6664(c).
The Court rejected the defense. Sami had bachelor’s and master’s degrees in accounting and had previously worked at PricewaterhouseCoopers. Despite that background, he kept no business books, used accounts that mixed personal and business expenditures, lacked receipts for many purchases, and could not establish the business purpose of many of the claimed expenses.
The Court concluded that he did not exercise ordinary business care and prudence.
Result
The Tax Court allowed portions of Sami’s transportation, toll, credit card processing, cell phone, and §199A deductions, denied the disputed influencer and other inadequately substantiated expenses, sustained the §6662(a) penalties, and directed the parties to compute the final deficiencies under Rule 155.
The Takeaway
You can’t just snap a selfie, post it, and call your life a business expense. If you’re advising influencers, focus on the basics: what was the real reason for the spending, when did the business actually start, and do you have records that tie the expense to actual revenue? Otherwise, expect the IRS to call your bluff.