If I purchase a firearm to be a rental or demo product so you log it and keep it in your book until sold or do you go ahead and dispose of it to yourself like a personal sale?  Do you write off demos as business expenses as well?

Open entry in A&D,  Cheap stuff gets expensed in first year.  Wilson's and above amortz over 3 years.

I sell demos.

By open entry you mean acquisition it and keep it on the books?

What if the ATF shows up for an inspection and the demo gun is not on premises?

Where would it be? You can't loan them out and there are no special rules for demo guns.

An employee could have it at an expo, like SHOT.  Or it could be at a LE demo, again under a bona-fide employee's control.

I was just confused by his wording. While I have never experienced it myself I can't imagine that it is a big deal as all manufacturers and sales groups have demo guns out and about all the time.

I've seen post it notes or pencil used to indicate firearms out for demo or stored temporarily off site with paper A&D books.

2nd hand experience with this.  ATF wants it back to their inspection w/in X hours for verification.

And if it's in another state? This happens all the time.

Long time ago... Had Demo guns out of the shop. Some at LE Departments, some at other venues. We anointed the A&D record with Demo-See 4473 for any firearms out for more than a couple days. Then stapled an explanation of specific purpose to each 4473. LE demo guns left with a dept had a LE letter  attached.
Firearms out with employee for demo had Company letterhead with explanation. We also a few times just logged the firearm out to the employee if range/Demo, sales/sample, was used on a regular basis.
If different employees need access then the only reasonable course of action is Company Letterhead with explanation and employees names.
Technically not sure it matters all that much.. The FFL is still in the care custody and control of the firearm, it was not transferred and the FFL showed due care in keeping track of the firearm. We went the extra step just to make sure some pain in the ass compliance person would have a hard time explaining to a ADA or Judge how lax our record keeping was.

Didn't come up in the one inspection I dealt with.