prototype furniture

[skdoorn12]

Client registered new LLC in Michigan at the beginning of the year. He is in the business of designing and handcrafting high end furniture pieces.

After business was started, he produced approximately 15 pieces of furniture to be used strictly for advertising (website photos and marketing literature, and for display in art/furniture shows). The pieces are not for sale.

The client wants to deduct the materials ($5,000) costs as advertising/marketing expenses for 2008.

It seems that they should be treated as an asset of the company and be depreciated as such. I don't know what class of asset this would fall under and how to depreciate it for.

Any comments or suggestions would be appreciated. How would you handle the cost of materials?

[Gretel]

I agree with treatment as asset. Only thing comes to mind is 7 year, but there might be something else out there.

[DaveO]

So if the pieces are an asset why couldn't he use Section 179? The end result is the same.

[skdoorn12]

I felt I could also 179 the expense and get the same end result but I didn't know if there were any "special rules" that anyone was aware with regards to this sort of situation. The IRS is known to have exceptions for things once in a while, right? Even with our simple tax code.