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!
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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