[weisinator]

I plan on a "how to" page for one of my sites, complete with pictures and step-by-step instructions, for products I promote on the site. This will involve some expense, including the product itself and extra materials available locally.

Is the expense of the product and extra material allowed as a deduction?

Of all the silly ways to convince my wife to let me play in the garage...

[Drewbert]

It would probably be classed as a fixed asset and thus you would have to depreciate it over it's lifespan. I don't think you could claim the full value of the product immediately as a deduction. Or maybe classed as stock if you propose to on-sell it later.

[weisinator]

Hmm. I might have to talk to a tax accountant.

[MichaelColey]

In general, any legitimate business expenses are deductible. Those would seem to be legitimate to me.

As for depreciation, if you're a sole proprietor, look into Section 179 deductions. You can write off a significant amount of assets in the year you buy them through this.

Of course, it's always best to get your tax advice from a tax accountant rather than a message board. The IRS won't come after us if we give you bad advice.

[weisinator]

Significant? I'm guessing $80-$100 for the project. I'm not sure how significant it is.

Just gotta show the newbies how easy it is to do, click here to buy this.

[MichaelColey]

I think the limit for Section 179 deductions was recently increased to $100,000.

[weisinator]

http://www.bankrate.com/brm/itax/Edit/tips/Stories/sec179_deduction.asp

The IRS says ineligible property includes:

* Buildings and their structural components
* Income-producing property (investment or rental property)
* Property held by an estate or trust
* Property acquired by gift or inheritance
* Property used in a passive activity
* Property purchased from related parties
* Property used outside of the United States
I guess I could sell the end product, make a small profit on it.

(Computer hardware and software is eligible for Section 179 according to that link. :D )

[MichaelColey]

You might want to look up the definition of a passive activity. I think you're misunderstanding it.

[weisinator]

Hmm, you're right on the money there. IRS tax rules come up for a google search of passive activity and this certainly does not fit the definition.

Like most things tax-related, I probably won't understand it without reading the IRS publication. Even then, it's sketchy.