Can game consoles and games be considered as a business expense and filed on taxes?

Question

I am a small business owner and I bought an xbox 360 to entertain clients when they're waiting or bored.

Answer 1

If you can prove to the IRS that they are reasonable and necessary for the production of income, yes it's a valid business expense. Whether or not the IRS sees the expenditure the same way that you do will depend upon your business.

If you were running a teen "drop-in" center it would probably be a pretty easy sell to the IRS.

If you were running a quick-lube car care center, maybe somewhat less so but even then a well described and rationalized reason may well get you the business expense. For example, if you launched an ad campaign hyping the free use of the X-Box 360 while customers waited for their car to be serviced and documented that you brought in more business profit than the cost of the machine(s), the IRS would probably go along with your explanation and allow the expense.

Marketing and presentation is everything in business. The IRS is no different -- sell it the right way and they'll probably see it your way too.

Answer 2

Try a few magazine subscriptions to entertain clients. The IRS is unlikely to accept the purchase of a game system as required to entertain clients, and at the very least, would red flag your return for an audit.

Answer 3

Probably not.

In order to deduct expenses, they have to be "ordinary and necessary" Video games consoles are neither unless you are in the business of selling them or designing games.

You'll have a hard time selling that to IRS in an audit.

Answer 4

NO