Can You Write Off a Rolex?

Why It Matters

The decision limits aggressive tax shelters on luxury goods, protecting revenue and forcing businesses to justify deductions with objective business necessity.

Key Takeaways

• Tax court rejects Rolex as fully deductible business expense.
• Deduction requires three objective criteria: essential, non‑personal, business‑only use.
• Personal luxury items generally fail the “not suitable for personal use” test.
• Tax attorneys caution against abusing “brand image” arguments for deductions.
• Violating §262(a) and §162(a) can trigger penalties and audits.

Summary

The video examines whether high‑end accessories such as Rolex watches can be treated as ordinary and necessary business expenses for entertainers.

A seasoned tax attorney explains the tax‑court’s three‑part test—(1) the item must be required or essential for the trade, (2) it cannot be suitable for personal use, and (3) it must be used exclusively for business. Failure on any prong classifies the cost as a nondeductible personal expense under §262(a) and not a §162(a) deduction.

Using rapper 6ix9ine as a cautionary example, the speaker notes that while a luxury watch may reinforce an artist’s brand, a typical person would wear a Rolex personally, so the “personal‑use” prong is easily met. The court’s objective standard dismisses subjective branding arguments.

The ruling signals that entertainers, influencers, and any professionals cannot automatically write off flashy items. Mischaracterizing personal luxury as a business expense invites audits, penalties, and potential reputational damage, prompting tighter expense documentation.

Original Description

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ABOUT JASMINE DILUCCI, JD, CPA, EA

Jasmine DiLucci has specialized in tax since high school when she first became licensed to represent taxpayers before the IRS.

Now as a tax attorney and CPA, she works with individuals and business owners across the nation to on Tax Planning, CFO Advisory, and IRS Tax Resolution

How Jasmine Got Here…

18: Became an Enrolled Agent, licensed to represent taxpayers before the IRS.

22: Earned an Accounting Degree and a Master’s in Finance.

23: Became a CPA

24: Stepped into leadership as she took over her own CPA firm

26-28: Juggled full-time studies at SMU Law while she was growing her CPA firm.

28: Graduated from law school 4th in her class and became an Attorney, all while managing her CPA firm.

29-31: Expanded her CPA firm to seven figures, with a focus on delivering top-notch service and exceptional value to every client.

32: Launched Tax Leverage to offer free online education and combat the rise of “tax gurus,” aiming to provide real, accessible tax knowledge.

Today: She’s dedicated to running her firm and leveraging her expertise to educate and empower others, helping individuals and businesses navigate the complexities of taxes and finance.

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Disclaimer: This information on this channel is for educational purposes only and does not constitute professional legal or tax advice.

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