We are a start up, that advertises hand painted wearables. We purchase clothes, paint the designs and advertise for retail on the internet. Our athletic shoe designs are listed at $1,200 on the internet. Recently, created a unique design, applied it to a manufacturer's shoe and gave to the manufacturer to demonstrate our designs.
How should we value this? Is it marketing? Is it gift?
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You can report it as marketing, but you can only deduct what it cost you, not the retail value of your finished product.
If it cost $10.00 in materials to make a product that sells for $200.00, that marketing product's deductible value is $10.00 for you.
If you personally supply the labor, you cannot add the labor in.
If you had employees work on it, you can add in their labor cost to it.
You can report it as marketing, but you can only deduct what it cost you, not the retail value of your finished product.
If it cost $10.00 in materials to make a product that sells for $200.00, that marketing product's deductible value is $10.00 for you.
If you personally supply the labor, you cannot add the labor in.
If you had employees work on it, you can add in their labor cost to it.
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