“The epitome of a go-getter,” Mr. Suleiman Sami worked full-time in JetBlue’s IT department with two accounting degrees while running his own business.[1] This “business had three components: (1) transportation services, (2) event ticket sales, and (3) social media influencing.”[2] Mr. Sami claimed connections with celebrities and the ability to grant access to exclusive events through those connections. However, almost all income for the years in question, 2019-2021, was attributed to transportation services. Sami v. Commissioner discussed the proper treatment of various purported business expenses, including the cost of meeting celebrities.
Mr. Sami only claimed $730 as the cost of goods sold, but this was disallowed without proof that he sold the tickets he bought. His sole proof consisted of statements for his personal bank account. Mr. Sami was more successful with the transportation deductions because the “strict substantiation requirements” did not apply to “any vehicle used by the taxpayer directly in the trade or business of transporting persons or property for compensation or hire.”[3] In addition, “[f]or the first time in his Simultaneous Opening Brief, the Commissioner argued that Mr. Sami failed to show that he meets the requirement that he used the mileage-rate procedure in the first year in which the vehicles were placed in service in the business, 2016. This argument was a surprise and substantial disadvantage to Mr. Sami because it requires different evidence to be presented, namely Mr. Sami’s 2016 tax returns.”[4] Therefore, it was not considered by the Tax Court. Nevertheless, the Tax Court applied a 20% discount to the transportation deductions because the contemporaneous records lacked “the precise addresses of pickup and delivery of passengers.”[5]
Mr. Sami’s office expenses were unchallenged by the IRS, and he was able to support his credit card processing fee deductions. His attempt to deduct the expenses attributable to his four cell phones was less successful. Due to obvious personal use and poor record keeping, only 25% of the reported expenses were upheld “[b]ecause it was reasonable from a business perspective to have at least one of the four phones.”[6] The Tax Court disallowed the claimed contract labor deductions for lack of substantiation. Mr. Sami further claimed deductions for “market research.”[7] These were television and streaming services. “Viewing television and online videos is a common source of personal enjoyment, and we are not convinced from Mr. Sami’s testimony that these payments were directly related to his business.”[8] Despite his claims that they “allowed him to learn about entertainment events, to which he could then sell tickets, and trends that might help him in his social media influencer activities,” these deductions were disallowed.[9] Mr. Sami also claimed a variety of deductions for “general marketing.”[10] “[T]he description of the first general marketing payment of 2019 is ‘Idigic’ followed by a string of 34 numerals.”[11] The Tax Court was left to guess what these expenses might have been. “There seem to be many charges from places that, for a fee, increase the number of followers one has on TikTok and Instagram: Buzzoid, Celebian.com, and the aforementioned Idigic.”[12] Since “[t]he statements do not clearly state the full name of the seller nor the product or service purchased,” and Mr. Sami commingled his business and personal accounts, these deductions were disallowed in full.[13] Mr. Sami’s case suffered greatly from his lack of due diligence. Yet, he prevailed with regard to the qualified business income deductions largely because the IRS disallowed them without explanation. Indeed, “[i]t is not clear whether the Commissioner now disputes this.”[14] Regardless, the Tax Court found that Mr. Sami’s business activities “are neither specified service trades or businesses nor performance of services as an employee” and therefore qualified under § 199A.[15]
Mr. Sami’s main expenses consisted of “marketing events and marketing charity.”[16] He paid for and participated in several charitable events hosted or promoted by celebrities who would interact with the payors. These expenses were poorly substantiated. “For example, for 2021 Mr. Sami reports one line from his credit card statement as ‘11/16/2021 (CR) TM*TICKETMASTER LOS ANGELES CA [1,661.57).’”[17] More fundamentally, Mr. Sami failed to convince the Tax Court that these “expenses are primarily incurred for business rather than personal purposes.”[18] These activities would likely have been done regardless of any business. “The Grammys, (attempting to) catching a pass from Tom Brady, returning a serve from John McEnroe—these are desirable things. Witness the high prices they commanded.”[19] Furthermore, these were not originally reported as business deductions but rather as charitable deductions. Unfortunately, the Tax Court did not discuss the feasibility of these expenses as charitable deductions because Mr. Sami abandoned that argument. However, the Tax Court observed that “if a charitable donor received some consideration in return for the donation, then the deduction is limited to the excess of the donated property’s value over the value of the goods or services received in return.”[20] Paying to meet celebrities might have benefited his nascent social media influencing career, but “the question is whether these expenses meet the necessary condition of being primarily undertaken for business, instead of personal reasons.”[21] It is irrelevant whether such “expenses are typical influencer expenses.”[22] In addition, while he now receives income from being an influencer, he did not at the time in question, “making such expenses more likely startup expenditures that must be capitalized under section 195. This would require much more legal analysis than Mr. Sami has proffered.”[23] This did not benefit his transportation business because “he could drive only individuals he personally knew” for lack of proper licensing under local law.[24]
The Tax Court did not categorically disallow any expenses as deductions. Even streaming services for one’s own use could theoretically be deductible as a business expense if the Tax Court could be convinced that it was primarily for business purposes. However, Sami v. Commissioner is clear that there is a heavy presumption that conventionally recreational activities are not undertaken primarily for business purposes. While hypothetically rebuttable, this requires consistent reporting, thorough substantiation, and persuasive testimony of compelling business reasons. In summary, the taxpayer must act as a reasonable businessperson in all respects. The Tax Court explicitly rejected that title for Mr. Sami by upholding his penalties because of his poor accounting records, particularly in light of his accounting background.
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[1] Sami v. Commissioner, Nos. 8834-23, 16512-23, 2026 Tax Ct. Memo LEXIS 73, at *3 (T.C. Aug. 18, 2026).
[2] Id.
[3] Id. at *15.
[4] Id. at *16 fn.7.
[5] “Mr. Sami’s original figures on his return relied on the Bank of America website’s categorization of his expenses, to which he no longer has access. On brief, his new figures rely on his contemporaneous hand-filled-out vouchers for each trip. These vouchers had no mileage numbers, simply a starting and ending destination, usually just listed as a city. He then assumed that each trip started and ended at his home, and he used Google Maps to determine the distance between the two boroughs or cities to and from which he was driving, or sometimes just stated an amount (e.g., all Manhattan-to-Manhattan trips seem to have been counted as five miles). Finally, he multiplied this estimated mileage by the IRS standard mileage rate for each year to reach his current claimed amount.” Id. at *16-17.
[6] Id. at *22.
[7] Id.
[8] Id. at *23.
[9] Id.
[10] Id.
[11] Id. at *24.
[12] Id.
[13] Id. at *25.
[14] Id. at *31-32.
[15] Id. at *32.
[16] Id. at *26.
[17] Id. at *30.
[18] Id. at *27.
[19] Id.
[20] Id. at *31 fn.12.
[21] Id. at *28.
[22] Id. at *29.
[23] Id. at *30.
[24] Id. at *29.