Taxes Made Simple

Kate (realtor) asks:

Hi Michael. I know that if you buy equipment for use in your business, you can take a Section 179 election to get a deduction for it. I also know there are special rules for computers, phones, and pretty much everything that I would use for my business. I'm going to be buying a rather expensive cell phone soon, and will be using it for my business. What do I have to do to make sure I get a deduction for it?

Thanks,

Kate 

Answer:

Hi Kate.

You're absolutely right that there are special rules for cell phones and computers. They're what's known as "listed property." When an item falls into the category of listed property, in order to be able to use Section 179 to deduct it in the first year (rather than having to depreciate it over several years), you have to use the item more than 50% of the time for your business.

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