dgary@ecsvax.UUCP (D Gary Grady) (02/01/85)
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I have been looking into the tax question myself, and I thought what I
have learned might be of interest to the net. I caution you in advance
that I am NOT a tax lawyer or an accountant!
The deductibility of a microcomputer used at home depends on when it was
put into service, for what purpose it is used, and whether it is used in
a "home office."
A computer used in a place of business (including a home office - but
bear in mind that getting a home office deduction is, well you remember
the cartoon in which Daffy Duck had to lay a golden egg?) is generally
fully deductable as a business expense on schedule C (for a
proprietorship) or the corresponding forms for corporate and partnership
returns. Most businesses should have a CPA handling that so I'll say
nor more on that.
For a computer owned by an individual and used at home, the rules depend
on whether the machine was actually "place in service" prior to June 18,
1984. A home machine placed in service prior to that date is deductable
to the extent that it is used for business purposes (e.g., if it is used
25% for business, it is 25% deductible). An employee can claim this
deduction (more correctly, an adjustment to income) by filing form 2106
(I think the number is - it's the form for employee business expenses)
along with the usual 1040. I believe you MUST file 1040 (not 1040A or
EZ), but you do NOT have to itemize personal deductions. Be prepared to
substantiate the percentages.
The full cost of the computer can be deducted in one year (up to a
maximum of around $7500 - see Lasser or any other tax guide for the
exact figure). Alternatively, you can spread the deduction over five
years and take an additional "bonus" investment tax credit in the first.
That gets complicated and again suggests the use of an accountant or a
careful reading of tax guides.
If the computer was placed in service on or after June 18 and you want
to write off the computer as an employee business expense, you've got
problems. First, IRS will insist you prove not only that you use the
machine for business, but that your employer absolutely requires you to
own one in order to keep your job(!). Then, you must show that it is
used at least 50% for business. How? IRS says by keeping a
"contemporaneous log" - that is, every time you use the computer you
write down how long you used it, and for what. Going back at the end of
the year and backfitting a log won't do. (Word is that this requirement
MAY be relaxed, but don't depend on it.)
I hope that's of some use. I say again that I am only reporting what I
have read in the media and in tax guides; I am NOT an accountant or a
tax attorney, and you'd do well to contact one of them if you have a
question. If you discover any of the above is in error, PLEASE correct
it. Good luck. Happy April 15!
--
D Gary Grady
Duke U Comp Center, Durham, NC 27706
(919) 684-3695
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