As a business owner like Beyoncé, you may face IRS scrutiny if unable to properly substantiate deductions claimed. Maintain clear records tying expenditures to legitimate business purposes.
Even if able to show a transaction occurred, the IRS can still deny deductions deemed too personal in nature. This gray area is common in entertainment where appearance-related expenses blur business vs personal lines.
Costs for things like clothing, makeup, hair can technically be deducted if event-specific and appearing a certain way tied to income. But know the IRS often disputes these types of deductions due to subjectivity.
Carefully determine deductibility of appearance-related expenses upfront. Document tie to business. Try to be reasonable with amounts even if unwritten “requirements” in entertainment. An overly aggressive stance prompts denials.
Proactively managing risk of IRS inquiry requires upfront planning, not after-the-fact defense. Handle entertainment deductions conservatively.
