So, what actually makes something a legitimate write-off?

Hint: Document, Document, Document

The expression "writing it off" is commonly used in business. Ever heard someone say, "Just write it off!" about a yacht or private jet and wondered, is that even legal? Not everything can be conveniently labeled as a "business write-off" just because you wish it to be so. 

Assets like yachts, jets, and wineries can make sense for some high-end businesses, but you must meet specific requirements. Here's how these luxury write-offs might work and how high-earning coaches can use them strategically.

The Basics: What Makes an Expense a Write-Off?

To be a legitimate business write-off, an expense must be:

➡️Ordinary: Common and expected for your type of business.

➡️Necessary: Helpful and appropriate for business activities.

➡️Substantiated: Supported by documentation proving that the expense directly serves a business purpose.

For luxury assets, "substantiated" means thorough records like event logs, attendee lists, agendas, and receipts to prove the asset is genuinely used for business. These are necessary for the IRS to allow the deduction.

Let's explore when a yacht, jet, or winery might qualify as a write-off and why renting may be a smart option.

🛥️ Yacht: Floating Deductions or IRS Red Flags?

Yachts can be legitimate expenses for companies that focus on luxury client experiences. Think luxury travel agencies or exclusive clubs using yachts for client entertainment or VIP events. But if you're a coach or online business owner, the IRS will only see a yacht as essential if it's core to your services.

Ownership: If a business purchases a yacht, it might claim expenses like depreciation, fuel, and maintenance as long as the yacht is primarily for business. However, this requires detailed records for each event—logs, agendas, attendee lists—to prove the yacht isn't just for personal use.

Rental: Renting a yacht for a single retreat is easier to justify. For instance, a high-ticket coach like Dean Graziosi could rent a yacht for a day of workshops and networking, and the rental would qualify as a 100% business expense. Renting means no long-term commitment and simpler tax treatment. If you're earning high six- or seven-figures and want to create a memorable experience for your clients, renting a yacht for a retreat could qualify as a legitimate business expense.

🛩️Private Jets: A Smart Choice for Frequent Travelers

Private jets are often tax write-offs for businesses that travel a lot. Companies like global consulting firms and luxury travel agencies can own a jet because they need to meet clients regularly. Well-known coaches, such as Tony Robbins, use private jets to travel between back-to-back worldwide events and meetings. For these professionals, having a jet helps them serve clients better, and they're a crucial part of their business model.

Ownership: If a jet is owned, the IRS allows deductions for depreciation and operating costs (like fuel or crew) if it's mainly for business use (at least 50%). The key here is careful tracking—every use should be logged to prove it's mostly for business.

Rental: Renting a jet for a one-time retreat makes qualifying as a business expense easier. Look at Melanie Curtis, a life coach and pro skydiver, who creates an experience to remember by incorporating skydiving into her retreats. Talk about creative accounting. This most definitely qualifies as a legitimate business expense.

🍷 Winery: Cheers to a Legitimate Write-Off

Wineries can be business assets for hospitality or event-focused businesses. A hospitality brand might own a vineyard to host unique events or offer private-label wines, making it a core part of its business.

Ownership: A business that owns a winery may deduct costs like maintenance and depreciation, provided it's mainly used for business events. To qualify, they must document each event and show the winery's role in the business model.

Rental: Renting a winery for a one-off event is often the simpler route. A coach hosting a high-end retreat, like  Marie Forleo, could rent a winery for a day of networking and reflection. The expense would need to be 100% business use for that day. Still, it's a unique, engaging experience that's easy to justify as a one-time business cost.

Could Big Expenses Fit Your Business?

Good news: you don't have to own a yacht, jet, or winery to use them in your high-end coaching business. Renting them specifically for a client event can align with IRS guidelines if the expense matches your income level.

Making It Work for Your Business: To Rent or Own?

In most cases, renting these assets for specific events is simpler and more tax-efficient than ownership. Here's why:

1. Rental is Event-Specific: Renting lets you claim it as a 100% business expense without ongoing personal-use issues.
2. Less Documentation: Ownership requires extensive logs and records. Rentals only need proof that the event was business-related.
3. Lower Audit Risk: Rentals generally raise fewer IRS questions than luxury asset ownership.

Final Thought: Renting may be your best bet if you're a high-earning coach or business owner looking to create unforgettable client experiences. It avoids the paperwork and IRS scrutiny tied to luxury assets.

Bottom Line: Make the IRS Your Ally, Not Your Enemy

Significant expenses like yachts, jets, and wineries can be business write-offs if they're ordinary, necessary, and well-documented. But remember, the IRS has strict rules. So, if you dream of a yacht for retreats or jets for unique client events, dream big—just rent! It's simpler, smarter, and lets you keep the focus on your clients without the extra paperwork.

When in doubt, consult a tax professional. Keep it real and legal, and create experiences your clients won't forget!