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Question

Deductible items...

by spikedzombies / February 25, 2014 1:01 PM PST

I run a side business of accessories and tactical gear..

If i buy some items my distributor sells to create a custom rifle for display purposes can I write off those expenses?

Say I have a stock rifle, and spend $400 in my own money to customize it and use it for displays at gunshows/in store and at the range... can i deduct my cost?

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All Answers

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Answer
Depends on your country's rules.
by R. Proffitt Forum moderator / February 25, 2014 1:15 PM PST
In reply to: Deductible items...

This is called depreciation. It rarely happens in 1 year (USA rules). You need to ask your tax and accounting person this question.
bob

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reply
by spikedzombies / February 26, 2014 10:05 AM PST

well im in the USA, Seattle to be exact

I think they are considered DEMO/Promotion/Advertisements.. i may be wrong tho.. but i was reading some stuff on turbotax forums and it seems thats what they are written off as..

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Then once you write them off.
by R. Proffitt Forum moderator / February 26, 2014 10:14 AM PST
In reply to: reply

You don't sell them as that would count as income at full pop. To me this sounds like a deprecation item and not something you write off in one year.
Bob

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Answer
Depreciation
by Accounting2013 / March 17, 2014 12:33 PM PDT
In reply to: Deductible items...

Bob,

For $400, it is not worth depreciation as you will get $80 per year according to IRS standards.

However, depreciation is considered "long-term". Let's suppose a rifle is only worth $200 and you put in $2,300 to repair and refinish the item AND its only purpose is to be a show piece of your skills and expertise. Then, you depreciate the item as you spent more than 50% of the worth and it becomes a new item. Plus, since you intend on showing it over time, it needs to be depreciated.

On another example, if you have a rifle that is only worth $200 and you spend $200 on a new stock. The item is still a show piece item and you spent more than 50% of the cost to repair & refinish the item. Then (technically) you still need to depreciate it. However, nobody is gong to split hair if you decide to expense it since your depreciation is only $80 per year.

In short, it's up to the accountant's professional judgment on a lot of these particular items. I hope this helps!

Best Regards,
Tran Nguyen
Accountant

PS It would fall into the depreciation of "Props and Settings"

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