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notch
Oct 15, 2005, 1:28 PM
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Does anyone working in the outdoor industry write off their gear purchases on their taxes? Through my experience with different products I'm able to choose the best items for our customers. Consequently, my participation in various outdoor sports has a definite positive impact on my company's bottom line.
I've had people outside of the industry tell me I should be doing this, but I was just wondering if anyone actually does. For background, my job is as a mountain sports buyer and inventory manager.
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thedejongs
Oct 15, 2005, 2:27 PM
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First of all let me make it clear that I am not advising you as to what you should or should not do. Now that that's out of the way :roll: , here are some thoughts:
You get a deduction for ordinary and necessary business expenses under §162. Since you are in the business of providing sales and inventory management services for your employer, I think it's going to be tough for you to claim legitimately that your purchases are ordinary and necessary for the continuation of your trade or business as an employee. Some might claim these are capital expenditures which you can depreciate (or write off under some accelerated provisions such as §179); this is going to be tough for the same reason. You simply don't appear to be in the business of using these assets in your trade or business. This could be an entirely different deal if you were in the business of guiding. However, even then, a writeoff could be a bit dicey directly or indirectly under the line of law dealing with uniform purchases-- the general rule being that you can't take a deduction if the clothing you purchase can be used in any pursuit outside of work (e.g. a lawyer can't writeoff his new pinstriped suit purchased primarily for office wear because he can wear that same pinstriped suit to church on Sunday; whereas a UPS guy should be able to writeoff purchases of the brown uniform because no on is (usually) going to be caught dead wearing that out to the crags). In other words, folks working in the outdoor industry have to be careful, even, because the IRS could easily claim that the newly-purchased Bibler could be used for personal weekend jaunts to the lake. Clear as mud, eh? All this being said, you'll have to guage your appetite for risk yourself.
Finally, I now have to encourage you to seek the counsel of your own tax advisor :roll: .
Cheers.
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notch
Oct 15, 2005, 3:22 PM
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For sure the issue isn't so much "What can I get away with?", but rather, what can I do, legally, ethically and with a high standard of integrity? The uniform example is interesting and it seems like there is a pretty big grey area there. I mean, in my early days when I was a car mechanic we had specific uniforms. Ugly, uncomfortable uniforms. However, I used them when doing yard work, my own car work, etc. No one would have argued that I could not write those off, but I still found value in using them for personal use. I wonder if I'm in the same situation with gear.
Are you saying (and I accept that you are not paid counsel, so your opinion is fine) that if this falls into an indefinite interpretation, I could get nailed by someone interpreting strictly, or is this something that is pretty black and white and I should stay away from it.
Thanks for the good advice, I'll still hold on to my receipts and ask my tax guy, too. Anyone else got any thoughts?
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kimgraves
Oct 15, 2005, 6:13 PM
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Let me begin by saying that I am not an accountant or a lawyer.
In general, unless you own the business you can't deduct anything. I.e.: W-2 employees don't get to deduct business expenses - it's not your business. If you're a 1099 employee, that's something else. But you'd have to be your own business.
If you do own the business you can expense items use in the production of a product or a service for your business.
For example, I design and build cabinetry for a living. I either expense or depreciate all my tools and materials as part of the cost of producing a product. I can't expense things that are not used in that production. For example the jeans and t-shirt I wear are not deductible. But the facemask used for eye protection is. The fire extinguishers are not deductible because they are not used for the production of the product.
Check with your accountant, but my guess is that because it's not your business, you can't deduct anything against that business. I.e. you're not filing schedule C.
Best, Kim
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tattooed_climber
Oct 15, 2005, 6:35 PM
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i just started working in a gym, so i'm very tempted to buy some shit and write it off... :P
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asandh
Oct 16, 2005, 12:48 AM
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kimgraves wrote:In reply to: In general, unless you own the business you can't deduct anything. I.e.: W-2 employees don't get to deduct business expenses - it's not your business
Well, this is not true. Employees can write off unreimbursed business expenses on Sch A. However most dirt bag climbers probably never use Sch A so its a moot point.
The Key Test is what "thedejongs" said above
... ordinary and necessay ...
Its pretty darn gray for the average joe, but if you're a CEO, it lets you write off that 2 million dollar toga party. :)
I also know people who write off their climbing gear as charitable expenses because they are members of non profit rescue teams ... but this also goes on Sch A.
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