Tax on Free Equipment

[Unregistered]

Situation: Computer equipment received through promotional offers as a result of point accumulations from purchases (ie, computer manufacturer offers points for purchases...accumulated points may go towards the redemption of merchandise, including additional computer equipment).

Corporate tax implications: Would the receipt of the equipment result in taxable event? Should the receipt of the free equipment be treated like a discount or a rebate? Would there be a difference in tax treatment from book treatment?

[Bees Knees]

The equipment is like a rebate on purchases. I buy a printer for $500 and get a $50 rebate. Total cost to me is $450. If I choose to use the $50 for additional business expenses, then my total deductible costs is now back up to $500.

Your situation is no different. It is as if the company decided to issue a cash rebate for the purchase of equipment, and the taxpayer decided to use that rebate to purchase additional equipment.

Just depreciate the original cost of equipment received and treat the additional equipment received for free as part of the same asset.