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(Topic ID: 268299)

Pinball tax deductible?


By Patrunkenphat7

5 months ago



Topic Stats

  • 29 posts
  • 15 Pinsiders participating
  • Latest reply 5 months ago by zaphod
  • Topic is favorited by 2 Pinsiders

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    #1 5 months ago

    For a business owner, are pinball machines for the office tax deductible under any circumstance?

    Thanks!

    #2 5 months ago

    Ask your accountant, it depends on how your business is structured.

    #3 5 months ago
    Quoted from Bud:

    Ask your accountant, it depends on how your business is structured.

    I’ll definitely ask him, I just want to have some fuel of “but these guys did it...” when he doesn’t give me the answer I want.

    #4 5 months ago

    If it's an asset owned by the business, you should be able to depreciate it.

    #5 5 months ago
    Quoted from Patrunkenphat7:

    For a business owner, are pinball machines for the office tax deductible under any circumstance?
    Thanks!

    Is it a legitimate business expense?

    There's your answer.

    #6 5 months ago
    Quoted from Trekkie1978:

    Is it a legitimate business expense?
    There's your answer.

    It’s legitimately in my business office and can be enjoyed by employees, clients, and myself, but it’s obviously subjective as to whether I actually NEED something like a pinball machine, so I’m unsure how the IRS would view this adult toy in an office.

    #7 5 months ago

    When I received one as a bonus they gave me a special form and a bump to cover the taxes... so if you are giving it as a part of an employees compensation package, tax is due.

    #8 5 months ago

    Businesses buy lots of stuff that they don’t really need, and spend money to entertain/motivate employees and customers. There are limits though on deductibility of employee award and similar expenses though that may apply. A lot probably has to do with the type of business. A dentist or car dealer putting one in their waiting area is different than a business that doesn’t have a legitimate basis.

    #9 5 months ago
    Quoted from Patrunkenphat7:

    It’s legitimately in my business office and can be enjoyed by employees, clients, and myself, but it’s obviously subjective as to whether I actually NEED something like a pinball machine, so I’m unsure how the IRS would view this adult toy in an office.

    It’s fine. Put the asset on your balance sheet and depreciate it. For tax purposes you’ll want to research the options of depreciation. You May be able to fully depreciate it in year 1, however you will probably have to recognize a bigger gain when you sell it later.

    #10 5 months ago

    Also I believe the safe harbor amount is still $2,500 for all businesses meaning if you buy an asset for the business and it cost 2,500 or less, you can just expense it and not have to list it as an asset and depreciate.

    Your accountant should know all this so just double check with them.

    #11 5 months ago

    Yes, it is tax deductible if bought for business reason. You can depreciate it, but when you sell you have to pay tax on the game (difference between the sale price and the value after depreciation)

    #12 5 months ago

    My kids orthodontist had a few arcades and a stern IJ in the waiting room so for his business yea it was a tax deduction .

    #13 5 months ago
    Quoted from Lermods:

    Yes, it is tax deductible if bought for business reason. You can depreciate it, but when you sell you have to pay tax on the game (difference between the sale price and the value after depreciation)

    What do you mean value after depreciation?? This is pinball so the value after sale is higher or at worst the same!!

    -1
    #14 5 months ago

    From the sounds of it, you’re putting it in the office for employees and yourself to enjoy.

    Definitely not tax deductible.

    It’s no different than if you bought your employees lunch for the day. Not a write off.

    Now, let’s say if you have a cafeteria, and you supply for free meals daily to your employees, because you don’t want them leaving the office. That’s a write off.

    In reality, the chances of you getting audited over a pinball machine are somewhere between 0% and 0%. More than likely, your accountant will catch it and make it a distribution. Don’t forget, he puts his name on the tax return too, putting his license in jeopardy. Ask yourself, what is the upside for your CPA to do something against tax law? Answer is none. Your upside is less taxes.

    #15 5 months ago

    Great info. Thanks, everyone!

    #16 5 months ago
    Quoted from Completist:

    What do you mean value after depreciation?? This is pinball so the value after sale is higher or at worst the same!!

    Then I suggest researching residual values and the differences between depreciating an asset that way for book purposes and for tax purposes.

    #17 5 months ago
    Quoted from Trekkie1978:

    From the sounds of it, you’re putting it in the office for employees and yourself to enjoy.
    Definitely not tax deductible.
    It’s no different than if you bought your employees lunch for the day. Not a write off.
    Now, let’s say if you have a cafeteria, and you supply for free meals daily to your employees, because you don’t want them leaving the office. That’s a write off.
    In reality, the chances of you getting audited over a pinball machine are somewhere between 0% and 0%. More than likely, your accountant will catch it and make it a distribution. Don’t forget, he puts his name on the tax return too, putting his license in jeopardy. Ask yourself, what is the upside for your CPA to do something against tax law? Answer is none. Your upside is less taxes.

    I haven’t done tax research in a while but I’m pretty sure certain typeS of staff entertainment is 100% deductible now. What qualifies for that, I’m not sure.

    #18 5 months ago

    Quick google found this but you’ll need to confirm this with the IRS rules. Per the new meals and entertainment rules that started in 2018:

    100% deduction allowed for qualified employee recreation, social, or similar activities (such as a Christmas party, annual picnic, or summer outing) and related facility costs (such as a swimming pool, baseball diamond, bowling alley, or golf course) which are primarily for the benefit of non-highly compensated employees

    -1
    #19 5 months ago
    Quoted from Patrunkenphat7:

    For a business owner, are pinball machines for the office tax deductible under any circumstance?
    Thanks!

    Yes, absolutely. Go for it!

    Now that we’ve covered your tax liabilities, do you have any stock market or medical questions we can help you with?

    #20 5 months ago
    Quoted from chuckwurt:

    100% deduction allowed for qualified employee recreation, social, or similar activities (such as a Christmas party, annual picnic, or summer outing) and related facility costs

    That's why my employer all of a sudden started our "annual" family day picnic two years ago.

    #21 5 months ago

    Yeah. I’m sure a ton of professional sports teams lost a lot of season ticket holders too as those used to be deductible but aren’t anymore.

    #22 5 months ago
    Quoted from chuckwurt:

    Yeah. I’m sure a ton of professional sports teams lost a lot of season ticket holders too as those used to be deductible but aren’t anymore.

    All that stuff used to be 100% tax deductible. I believe (trying to remember from college tax class) that congress lowered it to 50% deductible because of the golf courses Bethlehem Steel was buying just for their execs to play at.

    Remember, whenever congress thinks they found a way, people will find a way around it. Remember when under Clinton they limited the tax deduction of the CEO salary to something around $1 - $3 million, I forget what the actual number was. To get around it, stock options. Now CEOs made even more.

    *note: I know it was lowered to 50%, trying to remember the event that caused it.

    #23 5 months ago
    Quoted from Trekkie1978:

    All that stuff used to be 100% tax deductible. I believe (trying to remember from college tax class) that congress lowered it to 50% deductible because of the golf courses Bethlehem Steel was buying just for their execs to play at.

    It’s still 100% and you just have to make sure it’s not for the highly compensated employees only. Having trouble finding the full IRS details of the current rule though.

    #24 5 months ago

    First of all, the chances of being audited depend on what business you are in, what the structure of the business is (for example, S-Corps have a very low audit probability), and your revenues and ratios vs. industry norms. Normally you would have zero risk of any problem with a machine on your premises because you could defend it as "decor", just as a piece of art would be treated. It adds to the ambiance you are trying to accomplish to brand your business. The safe harbor for capitalization is $2,500, so any purchase under that cost should not be capitalized, just expensed. If it is more than that, you still may be able to write off the cost in one year under Section 179. If possible, keep it off of your balance sheet. Remember, property taxes are paid based on depreciable asset detail schedules, so avoid those local taxes if possible. Finally, if you're still concerned, just charge a "memo" fee to each employee of, say, 20 bucks a year to play the game when they want. The "gift" is de minimus and not taxable to the employee, and the charge back for "membership" or whatever you want to call it would be ancilliary revenue. Now you have a revenue generating asset, no question as to deductibility.

    #25 5 months ago
    Quoted from chuckwurt:

    Then I suggest researching residual values and the differences between depreciating an asset that way for book purposes and for tax purposes.

    Was meant only to be humorous and sarcastic.. i even added the sarcasm emoji! Lol

    #26 5 months ago

    I know. But there was actual accounting shit to be learned there!

    At the end of the day, you report this as a business expense or asset, what is it really saving you in taxes? Not much.

    #27 5 months ago
    Quoted from CrazyLevi:

    Yes, absolutely. Go for it!
    Now that we’ve covered your tax liabilities, do you have any stock market or medical questions we can help you with?

    Can’t tell if that’s friendly humor, but obviously the thing I asked is more relevant to a pinball forum, and I asked in hope that some others here have addressed this exact topic with their own businesses.

    Lots of great info, thanks again, everyone!

    #28 5 months ago

    Our company has a ping pong table in the break room... we wrote it off

    #29 5 months ago

    So who is responsible for sending me the 1040 P-25 form where I claim my lost quarters.

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