Is Mike White’s budget for luxury vacations 100% tax deductible for the rest of his life?

Factual Questions
1

The creator and showrunner of THE WHITE LOTUS, a TV series now in its third season, set in exotic hotels all over the world, Hawai’i, Italy, and now Thailand, is sent to various potential locations, presumably funded by HBO, or his production company, or somebody—but let’s say the series stops after this season, and White wants to continue taking luxurious vacations all around the world long after the series ends.

I think he could make a very plausible argument that he’s made (and paid taxes on) a lot of money that all originates in his taking luxurious vacations, so that he might again write another lucrative series, or another installment of The White Lotus, based on one of the vacations he’s now taking. How does the IRS view such claims? Total BS—“show us the money in your bank account, or fork over the taxes with zero deductions for your luxurious vacations” or “Oh, that’s all good—take luxury vacations for the rest of your life and deduct everything—after all you’re in the ‘seven-figure income based on researching luxury hotels business’”?

2

Personal businesses need to show a profit 3 years out of 5 or else they’re viewed as hobbies.

If he does sell that new show, he’ll have income to offset his tax-deductible expenses. If not he’s got a hobby that has no tax deductibility.

3

Presumably, White will continue to earn good money as a TV writer, producer, whatnot, if only as a recipient of syndication income from THE WHITE LOTUS. Does that count as “showing a profit”?

4

Yes and no. It’s a separate issue that the vacations must be ordinary and necessary to PRODUCING current or future income.

If he’s producing videos currently and they are about his travels, then maybe. But it can’t be justified by syndication income from productions long in the past, or indeed if he starts making content about Physics or Chess (stuff I watch).

5

Isn’t syndication income current income?

As a related question, say White travels to three exotic hotels in the next year, only one of which turns into a produced fourth season of TWL–wouldn’t all three be 100% deductible?

6

Yes. As long as they are currently engaging in related activity.

Syndication is income from past activity.

7

It’s somewhat hard for me to see the distinction. White is hauling in seven figures per year from syndication (let’s say) yet he can’t deduct current expenses from his current hotel visits with the plausible (to me) claim that they’re the basis of future shows about visits to hotels, which deals might not show profits for years to come but when they do they’ll bring more millions?

8

He (or his business) can accrue those expenses now, and use them to offset income when the income is produced in whichever year it’s produced.

He cannot (legally) simply deduct the expenses now on the basis of potentially possibly having those expenses somehow contribute to some future income in some future year.


Now the semi-truth in the USA now is that as long as your actual (not taxable) income is over WAG $10M, you’re 100% safe from audits. So go ahead and put down whatever fantasy numbers you want. Including that you have more deductible expenses than income and hence owe $zero tax for the year.

9

I think he would have a hard time showing how a trip he made in 2026 was part of the process he used in producing a show in 2024.

If he makes another series in 2028 and can argue it was related to his 2026 trip he might then be able to claim a business-related expense.

10

Well, right now his expenses are paid by HBO likely. But after he gets out of the show- as long as there is a profit, and the expenses are documented and related, he can likely get away with deducting them. Call it research.

11

I don’t see the problem - IANATaxAccountant, but…

If you want to research a specific show, or get ideas for it, you spend money to go on a trip to see how the hotel works, what the countryside there is like, or visit art galleries, go to the top of the local tower, etc.

Then you write and produce that show, or sell the idea to someone who does. The money for the show involving that locale can be used (plausibly) to offset some or all the costs of that “research”. You might even get away with “I visited 3 different locales and picked C”. (Show detailed notes of all locales as proof) Otherwise, hope you had fun on your vacation…

Where the OP might have a plausible case is if the show is in ongoing production - “We made season one and are getting ready for season two, possibly three”. Then it could be argued the research is part of an ongoing enterprise, if there’s a decent amount of relevance.

But once there is no definite process underway for future episodes that can be shown to the tax people, (i.e. show was cancelled, or no concrete plans for next season) then any research becomes a separate project which requires the costs to be written off against income from that project. IIRC from news stories, each movie is a separate “enterprise” with its own set of incomes and expenses, for example.

This is not different from anything else. The engineer who moonlights as a budding artist or antique car restorer cannot use his expenses as an “artist” or “restorer” to deduct from his engineer salary the cost of his art studio rental and equipment or fancy car hoist and spray paint booth. But he can deduct those from any income generated by the effort - provided, as LSLguy points out, he eventually makes a profit (2 out of 5 years). Otherwise, it’s a hobby not a business and you can’t deduct your big boy toys.

This is the point - as long as it can be shown the travels were relevant, that there were notes and details on what would fit into the show, and there is still a show in production… yes, why not? You’d have a hard time fitting in, say, travel to a place where foreigner hijinks are more frowned on (let’s say he goes on the Haj in Saudi Arabia) then I assume he’d really have to sell it to the taxman.

12

Let’s take our fictional Mike White at his word. He has a solid track record of creating several seasons of a TVshow whose basis is very rich Americans getting into mysterious goings-on while visiting a very expensive hotel (the fictional White Lotus) in exotic foreign locales, earning many millions of dollars on which he pays a fortune in taxes to the U.S. government. As he gets older, it takes longer and longer for him to research his subject matter properly, so he needs to travel to several exotic locations per year, traveling with a private secretary and staff who take meticulous notes for him on each location, do considerable photography, etc. as he waits to be properly inspired to figure out which of many plots he has in his mind will suit each particular locale, sensibly rejecting many as “unsuitable,” but he perseveres. After a few years, and many luxury hotels, he decides that Zanzibar (or Uruguay or Fiji) is perfect, and he takes a year to draft a script, and then there’s another year of pitching his draft to HBO and elsewhere (all meticulously documented), and then another year once his draft is bought by someone for pre-production, casting, filming, post-production, etc. During these last two or three non-income-producing years, while he’s waiting for all the parts to fall into place, he resumes travelling to hotels around the world for yet another season to be set in another exotic location. The upshot is that for each filmed and income-producing season, he must spend two or three unproductive years (income-wise) traveling the globe to find appropriate settings for a new season, living off his savings. Are we really saying that ONLY the one year in three that the series is running, or that he’s getting paid, can he deduct his research from his taxes? This seems crazy to me.

I actually had a somewhat similar situation myself personally, when I used to teach college–not with the government but with my dean, who wanted to see me publish a book during each academic year in order to be eligible for a salary raise as a productive faculty member. I tried explaining (as if my dean didn’t know this) that books take a long time to research, write, find a reputable publisher for, but in those years if I couldn’t produce a current contract for a forthcoming book, I got treated as an unproductive faculty member, essentially as a freeloader on the system, and I often got unsatisfactory raises. I finally got wise, and found agreeable venues willing to publish chapters of my books as articles, which took a little extra time for me (delaying my finished books even further) but which earned for me the regular raises I felt I deserved. This (and my Mike White scenario) struck as an incredibly stupid policy, making it difficult for someone to produce genuine valuable work because of foolish bureaucratic rules about the value of doing proper research. Maybe my Mike White just needs to find some way to game the system?

13

I think the point would be… what taxes? What income?

If he’s spending two years or more travelling and not making a show, and hasn’t sold a concept for income (so we presume, living of the avails of a previous show) then he’s racking up a huge expense for the show he eventually does sell. He will then have several years of high deductions, no taxes, unless his show does extremely well. Probably better net savings than if he could deduct from lackluster later-year royalties.

Your dean is an idiot. I saw my dad write a technical book when I was young, he had a sabbatical and did nothing else for a year. The list thanks for people he leaned on for technical assistance filled almost a whole page. Plus he spent hours of proof-reading it to my stepmother (who would not have understood technically) to verify that he’d not misspelled ot missed critical bits of equations, etc. I’m not arrogant enough to assume that a serious non-STEM book is any less demanding in terms of research, fact-checking, and quality control. A book a year, plus a regular schedule? Yikes.

But publish-or-perish is a mantra that seems to permeate the academic world, so I’m sorry that you have to live it. I suppose an alternate strategy is to publish a book on an adjacent subject so you could recycle much of the research.

14

Really, it kinda depends on the auditor. You must intend to make a profit and show that you can, a certain number of years out of 5. The auditor could require him to amortize the expenses until there is a income year.

And certainly a large sch C loss with no income is a solid way to be audited.

15

I believe that is the rule for sole proprietorships ( an unincorporated business with a single owner). Mike White’s business would almost certainly have some other business structure , which would file a business tax return and the expenses could be deducted from that business income in the same year. So if Mike White Productions Inc pays a million dollars in expenses in 2024 to research locations for the 2026 season of White Lotus and receives payments in 2024 for the 2023 season of a different show , it could (possibly) deduct the million dollars from that income on its business tax return. Then Mike White would be paid something by Mike White Inc and he would file a personal return and pay taxes on his income.

But Mike White Inc can only deduct expenses against its own income - if Mike White continues to spend millions on vacation without Mike White Inc receiving any income there’s nothing to deduct the expenses from.

16

So long as Mike White Enterprises “research costs” are not Mike White going off to Tahiti and living in a hors categorie resort with a private chef and a helicopter chauffeur service.

Because that’s 100% fraud.

17

A resort with hot and cold running prostitutes?

I don’t understand this point (seriously). If he writes about fabulously wealthy people spending obscene amounts of money on absurd luxuries. How is he supposed to understand the fine points of what exactly that experience is if he doesn’t subject himself to it? The whole point of the show is to see what these twits spend money on, and how they enjoy it and how they don’t appreciate it.

18

Exactly. But it would be the business’s income, not his personal income, that has to earn the money and claim the deduction.

And to avoid fraud allegations, presumably he needs to demonstrate some business plan, why he needs to stay there, how long, what categories of luxuries he experienced, etc. - all paid for by the business, and copious notes on what the experience was like, to validate the legitimacy of the expense… (i.e. actual research)

I realize this is a joke, but can you actually expense illegal activities, even for legitimate research?

19

He wrote. Past tense. If he actually writes/produces/releases videos in the present or future, he can colorably claim that these experiences are ordinary and necessary.

He cannot claim them on the basis that he wrote something about this in the past.

20

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