Testing/Development Costs

[Gretel]

Motorcycle outfit, sells parts, does repairs and builds custom motorcycles. They ask me if they can write off f.e. tires to test on their own motorcycles to be able to tell customers if they are good.

My gut feeling is that they can not do this or maybe only in some narrowly defined circumstances. If the owners would do some extensive, intensive testing it probably will be different then just putting whatever on their own rigs.

Does anyone know of a court case on this?

[Luis Mopeo]

Could you provide a little more info? Why wouldn't the tires be deductible? I don't understand the product or the process, but if they're paying for something they use in their business, why wouldn't it be deductible? I'm missing something here.

Maybe it just sunk in. When you say "their own motorcycles," do you mean the owner's personal motorcycles, not the business motorcycles?

I'd be surprised if you found a court case that matches the circumstances. If it's individuals who own motorcycles who buy tires for their personal motorcycles, I don't see a business expense there. If it is a reasonable and necessary expense, why isn't the business paying it?

It sounds like a legitimate expense for a motorcycle business. If it's their personal expenditures, the first hurdle you'd have is the partnership or corporation written requirement that owners spend money out of their own pockets. And that's before you determine if it's a legitimate business purpose.