Personal Use of Business Assets Question?

Hello,

I have a friend who I believe is headed for trouble. He is a partner in a small (< $15,000/year) Computer Service and Repair business. Today at Best Buy he was talking about buying an HDTV for his home and expensing it to his business. I tried explaining to him that this was a bad idea and that he could suffer a lot if he got busted for it. His reply was that he would be able to explain it away because he needed it for testing and that he would explain that his business built and sold home theater PCs and needed it for testing.

I believe the IRS is a bit more savvy than that and it takes more than just your word to satisfy them. From what I understand there is a class of easily abused assets that the IRS is particularly hardassed about and I can't see how a TV would not be in that group especially for a home office.

One area I am not clear on is Capital Expenses vs. Business Expenses and the Necessary and Ordinary test. On the IRS.gov page it says that you need to distinguish between Business Expenses and other expenses like Capital Expenses and that business expenses need to pass the Necessary and Ordinary test. Do capital expenses also need to pass necessary and Ordinary test?

Also, in an audit wouln't my friend have to prove that he "builds and sells" Home Theater PCs? If the business didn't buy parts for and sell very many Home Theater PCs and there are no records of sale or reciepts won't the auditors figure this out and conclude it's a lie?

It's my gut feeling that if he were to do this and get audited that there is basically no chance for him to get out of it. Something like a TV is so easily abused that unless you can demonstrate that an TV is used almost exclusively for the business purpose the IRS is going to ding you for it.