Will claiming bonus depreciation on an arcade game trigger an audit?
There is no specific audit trigger for claiming bonus depreciation on arcade games. The IRS processes millions of returns with depreciation deductions. However, the deduction must be legitimate and properly documented. What increases audit risk is: (1) claiming personal assets as business property, (2) failing to maintain required records for listed property, (3) inconsistencies between […]
What happens if the game breaks down or needs repairs?
Repair and maintenance costs for a business asset are generally deductible as ordinary business expenses under IRC § 162, separate from the depreciation deduction. If the game requires a major repair or component replacement, the cost may be deductible immediately or may need to be capitalized depending on the nature and amount. A complete breakdown […]
What records do I need to keep?
Because arcade games are ‘listed property’ under IRC § 280F, you must maintain heightened substantiation records under IRC § 274(d). Required documentation includes: (1) date the game was placed in service, (2) purchase price and proof of payment, (3) seller information, (4) written statement of business purpose, (5) physical location of the game, (6) contemporaneous […]