Here is a question recently posed to one of our instructors:
Q: I have a small business client who purchases products for review, mostly nutritional supplements. She will also try them out before recommending them to clients. However, the client does not sell any products, and does not carry inventory. Are these purchases deductible?
Answer: The short answer is... "it depends!" Tax pros and the IRS have been arguing over what qualifies as an "ordinary and necessary" business expense for decades. It seems contrary to common sense to say that a taxpayer that buys another company's products to promote (without actually selling anything themselves) is actually doing any type of business activity.
But let's not be so hasty!
It may seem difficult to believe, but there is a whole subsect of online businesses that do just that. They do not sell a product. All they do is promote someone else's product.
Every market has them. In publishing, they are basically "professional reviewers" who purchase products, and then write online reviews about them, or push the products in person or on Facebook. Once they get "famous" enough, they start to get stuff sent to them for free, and if they keep up with it, companies start to pay them for "consulting" (ie, paid reviews). It's basically shill advertising, which has existed from the dawn of time.
"I used this product, and it worked GREAT for me, now let me show you how you can change your life, your appearance, your relationship with XXX product!"
It's a lucrative business for some. They also make money off affiliate advertising (Google Adwords clicks). Many make their living entirely this way. And just in case you are still unconvinced that this might be a good way to make a living, the YouTuber that makes the most money does EXACTLY this. Her name is "Disney Collector" and she buys Disney toys and unboxes them and reviews them. That's it. That's all she does. And she doesn't get the toys for free, I think she buys them, because she's basically anonymous online (no one really knows what she looks like, she only shows her hands).
Last year, "Disney Collector" made $4 Million dollars USD on YouTube from affiliate clicks. Just promoting Disney products. She doesn't work for Disney, she's just some housewife in Florida that started making videos and now she's (presumably) rich. When 100 million people watch your videos, those $.05 clicks add up quick. No one would argue that she's not doing it for profit--obviously!
So, essentially, the answer is, YES, buying products to review could be an ordinary and necessary business expense, depending on the type of business activity.