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From: rdr@inuxh.UUCP (Robert Rindfuss)
Newsgroups: net.taxes
Subject: Computer writeoff
Message-ID: <394@inuxh.UUCP>
Date: Thu, 13-Feb-86 09:34:42 EST
Article-I.D.: inuxh.394
Posted: Thu Feb 13 09:34:42 1986
Date-Received: Fri, 14-Feb-86 07:56:42 EST
Distribution: net
Organization: AT&T Consumer Products, Indianapolis
Lines: 38

There are a couple interesting quirks to the computer writeoff rules:

1.  If the "qualified business use" (this means use in a trade of business,
not just managing your investments) is over 50%, then the computer can be
written off in the normal way, meaning you can take the sec. 179 deduction
and the investment tax credit, and depreciate your cost basis (adjusted for
the sec. 179 and ITC) over 5 years.  The quirk is this - as long as the
qualified business use is over 50%, you figure your cost basis on the
business use percentage PLUS the investment use percentage. For example,
if you used your PC 60% of the time for business, 30% of the time managing
your stock portfolio, and 10% for personal, you would figure your sec 179,
ITC, and depreciation based on 90% of the cost of the machine. If, instead, you
used the machine 30% for business, 60% for your stocks, and 10% for
personal, you could not take the sec 179 or ITC, but would depreciate
90% of the machine over 12 years (not 5 years).

2. The other quirk is that the computer is not considered "listed property"
(and hence is not subject to these rules) if the computer is located "at
your regular place of business." That's so companies like the Labs don't
have to keep logs on all their machines or worry about employees using the
machines for personal stuff.  This also implies that if you work at home and
maintain an area of your house "for the regular and exclusive use" of your
business and you keep your computer there, then you don't have to keep
the written log for the computer, and the machine would be fully deductable.

The only difference here is really the log keeping, since if you went into
your business room and started working on your stocks or playing Rogue,
you'd blow the "exclusive use" status anyway.  It does raise a question,
though  - what if I keep the machine in my "exclusive use" area and run a
serial cable to a terminal somewhere else in my house for when I want to
work on non-business?


All this stuff came out of the IRS publications on Depreciation and
Investment Tax Credit and is my interpretation of what it all means, no
guarantees, though.
						Bob Rindfuss
						inuxh!rdr