Computer deduction on new business.?

Question

I bought a $3,500 computer in 2004 for personal use. In 2006 I started a business and converted it to 75% business use. When filing for my small home business taxes, can I deduct the value of my computer? I have never claimed it as an asset before, and have not ever depreciated it. What should I deduct and depreciate?

Using Turbo Tax, and it has confused me. Thanks.

Answer 1

You can not deduct the value of the computer. You would capitalize it and depreciate the business use portion. You would use its fair market value as its basis, not your cost. Since the computer is a couple of years old, it most likely has a lesser value than what you bought it for.

The basis for depreciation is the lesser of the following:
-The FMV of the property on the date of the change.

-Your adjusted basis on the date of the change.

Answer 2

Set a depreciation amount - say 20% - claim the depreciated value in 2006 as an asset. Expense future depreciation at the 75% use rate.

Answer 3

Yes, but the value of a used computer is what? maybe a hundred bucks?
If i was doing your taxes and you told me you spent $3,500. on a new computer ,, well,, you'd have to show me the receipt.

If you claim the computer, it would be depreciated over at least 3 years and you'd be able to claim as a deduction the % that the computer is used for business.

Answer 4

You can pick it up at its fair market value when you convert it to business use. The way that computers depreciate, you won't be able to claim anywhere near the purchase price. You can then depreciate 75% of that, the business use portion.

Answer 5

I think you would be able to, but what I'd recommend doing is picking up a copy of Ron Mueller's excellent ebook, that put's home business tax into readable terms.

Check it out here:
http://getfreereport.net/report.html

Answer 6

issues that have a corporation purpose you could have kit, aspects to alter aspects on the computers you're repairing, merchandising, telephone, workplace aspects,etc if that's out of your place you could have an area unique to the corporation and the % that section pertains to the full is the % of your kinfolk expenses you could declare besides and in regard to the telephone and information superhighway provider, while you're working out of your place, those 2 centers could be unique to the corporation(no longer own)