LEGAL GUIDE
Written by attorney Robert Jan Suhajda | Mar 21, 2011

Which depreciation method to use to depreciate computer used for business expense?

Which depreciation method to use. The depreciation method you use depends on whether you meet the more-than-50%-use test.

More-than-50%-use test met. You meet this test if you use the computer more than 50% in your work. If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). In addition, you may be able to take the section 179 deduction for the year you place the item in service.

More-than-50%-use test not met. If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). You also cannot claim the section 179 deduction. (But if you use your computer in a home office, see the exception below.)

Investment use. Your use of a computer in connection with investments (described later under Other Expenses) does not count as use in your work. However, you can combine your investment use with your work use in figuring your depreciation deduction.

Exception for computer used in a home office. The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office. You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. You also may be able to take a section 179 deduction for the year you place the computer in service.

You must keep records to prove your percentage of business and investment use.

Cell Phones

For tax years beginning after 2009, cellular telephones and similar telecommunications equipment have been removed from the definition of listed property.

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