Ask The Taxgirl: Blogging Reviews

Taxpayer asks: I loved your presentation at BlogHer. Your session addressed more of my blogging concerns than any other I attended.

My friend and I have been discussing taxes and blog product reviews lately, and I have a few interrelated questions. I would really appreciate whatever help advice or resources you can offer. I have no idea where to find this information.

– When I receive a non-consumable product from a company for review at no cost, do I have to declare the product as income? If so, what value should I declare- Amazon price, recommended retail price, or manufacturing cost? What if I give the items away after review?

– When I buy something to review, is it deductible? Does it matter if I keep it for home use after the review (high chair or board game), it is entirely consumed in the process of reviewing (sports drink), or it is partially consumed in the process of the review and then used at home (triangular toddler crayons)?

– Are review items which I haven’t purchased or declared as income eligible as tax deductions when given to non-profit organizations?

Thank you again for a wonderful presentation!

Taxgirl says:

Hey thanks, I really had fun at BlogHer! I think I’m speaking again this year. There are a slew of conferences all over the country this year.

As far as your questions go, here are my thoughts:

1, If you receive a product to review from a third party, it should not be income to you assuming that it is:
a, solely for review and not as compensation (meaning that you get a book if you review a DVD)
b, not in exchange for any services
c, not part of an agreement wherein you promise to write a good review
d, de minimis

This is clearly subjective – I’m not relying on any code sections but more my gut. If someone gives you a Jaguar to review and says that you can keep it, I’m thinking that there’s more going on than offering a product for review (and where can I get that gig?). But the receipt of books and products for review are, to me, like samples, and should not be taxable.

I will say that I do not report the value of books passed along to me for review. Part of my issue with respect to that has to do with the fact that the actual FMV of the books are hard to determine when you are presented with, say, “Review Copies” which are clearly marked as such and would be nearly impossible to sell. Additionally, I am not in the business of resale and I don’t generally use the books personally after I receive them, so in that way, they are of no real value to me other than as a means to income – of course, the income is reportable.

2, With respect to buying a product for review, if it’s consumable, I think it’s fully deductible as the cost of doing business. If it’s not consumable, I think it matters how you use it. If you buy a computer for “review”, it’s not really for review, is it? But it may be deductible as an office expense. Your Manolo Blahniks? Also not deductible, especially if you’re using them for personal use afterwards. I think you use a common sense approach here. If you buy a non-consumable item for review and you convert it to business use, you may be able to take a deduction for the business use (but not for review purposes). If you buy a consumable item for review, I think it’s deductible – it was clearly for a business use. If you buy a non-consumable item for review and convert it to personal use, I don’t think it’s deductible (though, depending on the cost and the split in terms of business versus personal, it might be pro-ratable).

3, As to the last question, you generally match items of income with deductions. So, if you don’t declare a review product as income, I don’t think you should claim the deduction when passed along. I am sure that there are some fairly aggressive accountants, etc., that would claim otherwise. And I think you could likely make an argument for the deduction in the same way that you can pass off ugly holiday gifts from relatives that you don’t know as donations when you give them to charity… I just choose not to. For the record, I donate most books sent to me to a local library. I don’t ask for a receipt and I don’t include it on my tax return.

If you purchase the product and then donate it, I think you should claim it as a deduction.

Any other thoughts here?

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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16 thoughts on “Ask The Taxgirl: Blogging Reviews

  1. This is a very helpful post Kelly. I hadn’t thought much about reporting before, and now I’m glad I hadn’t. Seems like much ado about nothing, though I’m still looking for that Jaguar in my mailbox. I have to get me a bigger box!

  2. Thanks for covering this topic – I have just been going through my last year’s worth of samples and products purchased for review purposes, and I’m about to donate them to charity. I was wondering if I could take the deduction, and now I feel like I understand the situation better.

  3. Hi Kelly, thanks for this post. Been thinking a lot about this lately.

    Question, if I bought a product, reviewed it, then gave it away as a giveaway price, would that fall under “donation”, therefore will be considered as deductible? CDs, DVDs for examples. My husband did a lot of these in his music blog so we’re curious.

    Thanks. Happy New Year!

  4. Dexie –

    A giveaway as a prize would be deductible, but as a business expense, not as a charitable donation. It would be the cost of doing business.

    You can only claim a charitable donation if you donate to a qualifying charity and get it in writing (meaning a receipt).

  5. Interesting blog you have here. You may want to consider adding a more Circular 230 specific disclaimer at the bottom of posts like this. For example: In accordance with the Internal Revenue Service Circular 230, we advise you that any discussion of a federal tax issue in this communication is not intended to be used, and cannot be used, by any recipient, for the purpose of avoiding penalties that may be imposed on the recipient under United States federal tax laws.

    Just something you might consider.

  6. Thanks for the 230 reminder. Ironically, I have it on the bottom of my emails but I don’t think it applies to the blog for a lot of reasons.

    Additionally, this blog:
    does not constitute legal advice; and
    does not create a client/attorney relationship.

    There’s more on this outlined here: http://www.taxgirl.com/about/

    I think it’s a pretty sad commentary on our society that multiple disclaimers aren’t enough.

  7. Yeah, I guess being a tax attorney, I am inherently cautious with putting anything that even remotely sounds like tax advice, and that isn’t a covered opinion, into writing without the Circular 230 disclaimer, as its application seems broader to me than it does to you.

  8. Kelly (et al),

    First, you are a tax genius!!!

    Wanted to know if your thoughts on this topic still hold true given the original post was December 2007 and that’s along time ago in internet/FTC time?

    My wife and I operate product review sites/blogs and view our sites as content sites intended to make $$ through advertising and other ancillary means. I never gave a thought to the prospect that products received might be considered income until the topic has been gaining in online discussion. I have even had PR people expressly state they see the submissions as not for resale and having no retail value and get movies that state this on them.

    My thinking (aside from a few exceptions where product was accepted and agreed on as compensation) and honest intent is that we fall under your response to question 1 above but I wondered if you still hold to these thoughts?

    Thanks!

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