I own an LLC that creates websites. I want to create a site that does product reviews. Can I write off the products I review (tech equipment, game consoles, purses, etc) as business expense?
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Are Products Purchased For Product Reviews Considered A Business Expense?4 comments to Are Products Purchased For Product Reviews Considered A Business Expense? |
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Yes, but with a couple of caveats.
First off you must be running an actual business with the intent of turing a profit. The IRS recognizes that start-ups may take a few years to start turning a profit but if you are continuously showing a loss the IRS will probably rule that your business is really a hobby and limit your expenses to whatever income you made.
Second, if you sell the items after the testing and evaluation you must claim the sales price as income. This has the effect of limiting your deduction to the difference between the purchase and sale price.
bostonia…’s answer is mostly good, but I want to add to both answers above that if you do not sell the products after reviewing them, and instead keep them to make personal use, the IRS may decide that you bought them for that purpose and disallow the deduction.
As far as I know newspapers, magazines, television companies don’t buy products to review them. Manufacturers send the products for free, and even then it may or may not be reviewed.
What is your business model? How do you intend to earn from this web site?
About the business expense, all previous posters are right.
Yes.
If you resell the items after the review you can only deduct the difference between the purchase price and the selling price. Keep ALL of your receipts for at least 3 years.