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Posted by Benjamin Yazersky CPA on February 6, 2007, 10:17 pm
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> I run a small software development business. My office is
> the spare bedroom in my apartment, which contains a computer
> desk where I work and a spare bed for guests. In 2006 I
> purchased the following capital equipment for business use:
>
> Computer monitors
> Video card
> DVD burner
> Computer cables
> Technical books
>
> Total spent on the above is roughly $1K. My business
> generated about $12.5K in revenue last year.
>
> So I'm trying to figure out how to properly report these
> numbers on my income tax forms. Based on my understanding
> from reading Schedule C, the monitors, video card, dvd
> burner, and serial cable are all capital expenses that must
> be depreciated unless I take a section 179 deduction. So I
> went to form 4562. Reading the instructions for that form,
> it sounds like my capital equipment falls under the
> definition of 'Listed Property' (since they are computer
> peripherals) and they do not meet the exceptions clause
> (they are not used exclusively at a regular business
> establishment, since my second bedroom is not solely devoted
> to my business).
>
> So what I ended up doing was filling out the Part V Listed
> Property section of 4562, line 26. I filled out columns a-d
> + i. I left the columns related to depreciation blank as I
> was taking a section 179 deduction for each item. My capital
> expenses spanned two forms and I didn't see a continuation
> sheet similar to Schedule D-1 for this. I then went back and
> filled out Part I and Part IV of form 4562 then put the
> value in the appropriate box on Schedule C.
>
> Finally, with regards to business use of the equipment, I do
> use the computer monitors for personal reasons a small
> percentage of the time.
>
> My questions are:
>
> a) Is my capital equipment 'Listed Property'?
> b) In Part V of form 4562, should I leave the depreciation
> columns blank?
> c) Is the Identifying number field on form 4562 my Tax EIN?
> d) Do I have to document every use of my computer equipment
> (either for personal or business use) to compute the
> business use percentage, or are conservative estimates
> allowed by the IRS? I use my computer every day and it's
> cumbersome for me to document how it's being used all the
> time.
> e) How do I deduct the books? I'm currently reporting the
> books on Schedule C as 'Other Expenses'.
> f) How do I find a competent professional to help me in
> future years?
> I've tried finding leads through friends but no one I know
> has any contacts and I don't know how to quickly evaluate a
> tax professionals expertise. I'm trying to learn enough on
> my own so that I can make sure my taxes get done right, even
> if I don't do them myself.
>
> Sorry for the lengthy query. Thanks for any insight you can
> provide.
short answer - your're on target with your item "f" however,
you should find a local CPA to help you TODAY (not next
year)
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
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