Amazon Vine

[randellion77]

You're coming around myname.

Let's assume your business is editing and printing business plans for startups.

Suddenly your printer is out of ink.

You decide to spend some of your labor and review printer ink from Vine.

They send some, you run a test print, do the review, and then instead of using this $100 ink cartridge for family use or giving it to a relative, you use it exclusively for your Editing business.  You've expended it there.

However, the drill you reviewed is not an expense b/c it is not used in your business.

[janetax]

"Paid with labor", when it's your labor, is what makes it INCOME FROM WORK.  You worked (your labor), you got paid.  

That is how the IRS will see it, 100% of the time. 

What you're saying here will prove to any auditor that it's income, not an expense. It is just that simple.  You performed a service and you were compensated for that service with the items you received.  That's the end of the story. 

If you need something in order to properly test a product - say the ingredients for bread to test your bread pan, you can deduct a reasonable amount of that (like the cost to make one loaf for testing or such).  You could deduct miles to pick packages up at the post office, if that applies to you, and maybe a home office deduction.  The cost of anything you use to produce your reviews - editing software or something like that - could be used but using the items in another business and calling those an expense won't work if audited.  

All you'll do if you try to explain that you paid with your labor is strengthen the position that it's self-employment income.  Becauset that is what it is. Income for your work. 

[randellion77]

I have no argument that it is income from work.  Income for my review.

An asset, my work, has been converted into a different form of value; a Vine item (income per 1099-NEC).

My review work is done in the context of, and under the umbrella of, my Rental Enterprise.

It just so happens that I need to expend the entirety of this Vine item immediately and wholly in the Rental Enterprise.  I am expending this Vine asset on the Rental Business.  Nowhere else.  I'm not giving it away or selling it for money.

Income is earned by the Rental, and Income is spent on the Rental.

[mynameismynameandonlymyname]

I don't think you quite understand how it works. I have been watching some videos from tax professionals on how to properly convert personal use items to business use items. So there could be something there. You have to keep a spreadsheet of how much you paid for the item of your own money. How much the fair market value was when you started using it in your other business. Then you have to choose the lower of the two as the value. Then you have to see how many years the IRS makes you depreciate the value of the item. Then you have to do the math to figure out how much is depreciating each year. The example was a laptop and desk you owned as a personal item. You begin using them in your business. The IRS says the laptop depreciates at 5 years and the desk at 7 years. So you do the math. Then you can deduct year one value on year one, year 2 on year 2, etc. But I do not know how it applies since we received the item for free. I think we would just put $0 in how much we paid since the ETV is income and not what we paid. Then we could maybe put the ETV as what it is worth. But then you have to choose the lower amount so the $0 would mean we cannot depreciate it. But if we could put the ETV as what we paid, since we received it as income and then it would be like we then bought it since we have the item and no actual money. I personally think receiving $100 Vine item is the same as receiving $100 cash and buying that item. You just can't deduct it on taxes like that. But if you thought of it that way and put the ETV as what you paid because that is the value of the item when you got it for personal use. Then you do the spreadsheet to convert to business use. Then depreciate it properly. That might be a legitimate way to deduct it as a business expense. I am NOT a tax professional though but I feel this is worth asking a tax professional if this would be a legal way to do it.

[randellion77]

Amazon tells you what the FMV is, it's on your 1099-NEC.  They are new items, not used, not damaged.

It also might help you to distinguish between capital goods, which should be depreciated, versus consumables or comparable expenses, which are not.