Client operates (part-time) one of those businesses where product is purchased (required) and sold to customers both from inventory and via website direct from the company on commission. TP tells me "everybody" deducts their personal-use product since it is used to demonstrate how effective it is (i.e, "I use it, so it works.") They call it an "advertising" expense. I can see it if the same product was used over & over, but that is not what's happening. Any opinions?
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Deduct the products pulled from inventory for personal use from the cost of inventory. They're personal. (Do you deduct your shaving supplies so you look more like a clean-cut, honest preparer?!) Not a business expense. Only "testers" that customers and prospective customers can try out (put on a little hand lotion, for instance) would be a marketing expense. Everybody Does It. Not MY clients. -
Apparently everybody the TP knows in this particular business does. I told her not a chance.Comment
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I had a client who wanted to deduct her pricey floor lamp for her living room to show off the clothing line that she sold. She had only two showings for the entire year, in her living room. No way; it's a personal use lamp and would be there whether or not she was in the business of selling clothes. Maybe she'll rent a lamp for the hour or two showing next year!Comment
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What if she swore she never turned on the lamp, never looked at the lamp, and never cleaned the lamp except for those two times a year she showed off the clothing?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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IRS used to have a Publication 911 titled "Direct Sellers" which covered a lot of issues, including this one. But the latest edition I can find is 2003. Apparently, it is no longer offered.Comment
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just because they do it doesn't make it deductible. This is like the airline stew who wants to claim nylons and makeup because on the job is the only time she wears them. It isn't whether they use the item personally but whether they can use it personallyBelieve nothing you have not personally researched and verified.Comment
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Might this be useful ?
(In the interest of clarification and as a warning - this is not intended to serve as a cite...)
"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Who doesn't have taxpayers that know "everyone" deducts something. For me it's usually "business" meals.Comment
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Thanks. I printed that off for me. It's almost word for word what was in Pub 911. Nothing has really changed from that original Pub except current year limits (mileage, 179 ded, etc.)Might this be useful ?
(In the interest of clarification and as a warning - this is not intended to serve as a cite...)Comment
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That raises an interesting chicken-and-egg question.
Wonder which came first - the ATG or the Pub?
I did find the Pub 911 - as far as I an tell, the last time it was revised was 2003. The comments on the next year's version seem to hint that it was not going to be revised thereafter, and it looks like it fell off the radar screen after the 2004 filing year.
Last edited by JohnH; 04-22-2015, 01:16 PM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I'm in investment sales - are any investments I make deducted as business expenses? Hey, I use the product also!Comment
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Yes, that is the one I had printed off when I posted. I still like it for its info, and gave it to the client to review. Inventory? What's that? That was fun. I don't like these direct sales businesses. The client is forced to buy product on a periodic basis, and it's cash sales. "They just put the cash in a jar. Do I need to give them a receipt?" And sales taxes? Huh? I told her she had some questioning to do of her company.Last edited by Burke; 04-23-2015, 04:06 PM.Comment
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