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Posted by doshan@scicable.com on March 6, 2007, 6:03 am
Please log in for more thread options >>> I am currently working as an accountant for a company. I am
>>> studying for the CPA exam. After, I'm certified I hope to do
>>> tax preparation and financial planning on the side for
>>> individuals. I purchased a laptop in 2006 that I exclusively
>>> use to study for the CPA exam and I plan on using for my
>>> business when I become certified. Can I fill out a schedule
>>> C to deduct the laptop expense from my taxable income even
>>> though I have no gross receipts. From what I can as long as
>>> I am profitable 3 out of 5 years I would be able to deduct
>>> this. I hope to be profitable next tax season (in 2008) so I
>>> think I could do this. Please let me know. Any advice would
>>> be appreciated.
>>>
>>> Assuming I can deduct the laptop, I believe I have a choice
>>> of deducting it all now or deducting it over 5 years. I
>>> would prefer to deduct it now. Is this correct that I am
>>> able to deduct it 100% right away?
>> You should check out the Regs for Section 162 (Specifically,
>> Treas. Reg. 162-5) and the resulting tax cases. You will
>> have to determine whether you are in the business of being a
>> CPA and/or financial planner and when that began. Generally
>> expenses incurred prior to entering the profession or that
>> qualify you for a new profession are not deductible as
>> ordinary business expenses. But, since financial planning
>> has no specific requirements (i.e., you could have no formal
>> education and no work experience and be able to hold
>> yourself out as a financial planner, you might be able to
>> argue that you were in that business of being a financial
>> planner prior to to taking the CPA exam and that you
>> purchased the laptop in furtherance of that profession
>> (which is a hard argument if you bought it to take the CPA
>> exam, which would qualify you for another profession)). It
>> will depend on your facts though....
>>
>> You will recall the case last year where the MBA student was
>> able to successfully argue that he was already in the
>> business; therefore, he was entitled to deduct his MBA
>> expenses....
> Many of us expensed all or part of our graduate education
> as Continuing Professional Education. When I started grad
> school, I had four professional certifications by
> examination and wrote off four courses a year plus books
> and pro-rated fees as CPE. Because my wife was a Certified
> Internal Auditor and had a job as an Auditor, we were able
> to write off 21 semester hours of Accounting credits, And
> yes, if you are a manager, you can write off part to all of
> the cost of an MBA.
>
> But the OP wants to write off a laptop "used exclusively
> for CPA exam preparation". That's both a quantum leap and
> a no-way-Jose. To prevail upon audit, he'd have to deny
> what he has written here and that's somewhere between bad
> karma and perjury.
>
> And then we get to his non-existent business for which this
> computer is clearly a start-up cost.
With all due respect one can write off most anything they
want. That does not mean one should have. I don't think it
is quite so clear as you make it to be. I would be
especially skeptical of the because you are a manager you
can write off part to all of the cost of an MBA. Most of
these types of situations are maybe, it depends, etc.
Probably would run about 50-50.
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