What Kinds of Business Equipment are "Listed Property?"
The IRS says that listed property includes:
- Passenger automobiles weighing 6,000 pounds or less.
- Any other property used for transportation, unless it is an excepted vehicle.
- Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment).
- Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. (A "regular business establishment" includes a legitimate home office.)
- Cellular telephones (or similar telecommunication equipment).
How Can this Business Equipment Qualify for a Deduction?
Listed property can qualify for a deduction in one of two ways (from IRS (in Publication 946):
- Deduction for Employees
Employees can deduct listed property on their personal tax returns only if (1) it is for the employer's convenience, or (2) it is required as a condition of employment. If you want to take this deduction, be sure you can substantiate one of these two criteria.
- Business Use Requirement
The property must be predominately (more than 50%) used for qualified business purposes.
Depreciation for Non-qualified Business Use
If the property is not used at least 50% of the time for qualified business purposes, you cannot claim a section 179 deduction or a special depreciation allowance. In addition, the IRS says, "you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. You may also have to recapture (include in income) any excess depreciation claimed in previous years....A similar inclusion amount applies to certain leased property."
Disclaimer: I am not a CPA, tax preparer, or tax attorney. My purpose is to provide you with general information and understanding. Please talk with your tax adviser about this issue and other tax and legal issues.
