Commentary, news and reflections about
this taxing life, by Vernon Jacobs, CPA.
Jacobs is the co-author of Legal Ways to Save Taxes Offshore & Onshore, of Offshore Tax Strategies, of The Controlled Foreign Corporation Tax Guide and of Risk Management for Amateur Investors. He is the Editor & Publisher of the International Wealth Protection Monitor newsletter and the free Q&A service, the Jacobs Report on International Financial Planning. He is the President of Offshore Press, Inc. and is a member of the International Tax Technical Resource Panel of the American Institute of CPAs. He has been a CPA since 1962, with a focus on taxes since 1975. .
How to Deduct a Personal Computer
I think it
was the infamous 1986 tax law that
clearly prohibited the deduction of a personal computer to manage your
investments or to do work at home.
the restrictions do not apply if
the computer is used in a home business (even if it's a part time
if the home office is the only business location. In addition, you can
the cost of a computer that you use to manage your investments, but
it's not a
deducting the cost when you buy the computer,
you can deduct it when you sell it or scrap it. But, you first have to
depreciate the computer on a straight line basis over 12 years. You
that on your tax return on schedule E and/or schedule A. As a practical
you won't get very much of a deduction each year. But, here's the
trick. You do
get to deduct the un-depreciated cost of the computer when you sell it
people, that's about two or three years after the purchase date.
Thus, your deduction isn't eliminated. It's delayed.
Please note that unless the computer is used exclusively to manage your investments or for tax related matters, you must allocate the use between the investment and personal use. If you use the computer 50% of the time for investment and tax purposes, then you can deduct 50% of the cost as described above.by Vernon Jacobs, CPA
Co-author of Legal Ways to Save Taxes Offshore & Onshore
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Jacobs is the co-author of Legal Ways to Save Taxes Offshore & Onshore, with J. Richard Duke, JD, LLM.