Thanks to everyone for their opinions.

I asked this list about my equipment and wanted to see if
this was fight worth waging. I see from the responses that
it is probably not and so, I will pay the $800 in question.
(It really is not a lot of money). It does seem a lot easier
than spending money on a lost cause. I have bookmarked this
list and will continue to learn about tax questions from
other's questions and answers.

Thanks,
Mallard

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"Mallard" wrote:

- quote -

You've added some rather perplexing facts. If the computer
equipment was originally acquired for personal use and later
converted to business use, then IRS would be reasonable in
viewing this as implausible. In fact, from only your brief
description of what you do, original acquisition for
business use to the tune of $76K may not be completely
plausible to IRS either. Just guessing, but hence their
insistence on receipts in either case.

You should be able to obtain checks and/or charge card info
from the bank, which could be sufficient even if not all
documents can be secured. If some remain unavailable and
you can locate proof of original retail prices, it's
acquisition can be corroborated by the proof on the balance
of the stuff, because with photographs you can prove you now
own it all. However, if what you mean by "some
documentation besides receipts" means they further want
proof as to actual use, then this case may be unusual and
more facts may help, though some of us may be stumped as to
what to then advise. Normally, they don't kick up much fuss
over prior-year acquisitions suitable and typical for biz
use in context, as it can be a rather unproductive issue.

Fred F.

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"Harlan Lunsford" wrote:

- quote -

The only time the camera would have been handy (great pic
for a new-hire training class) was when a charming, 85-year
old woman pulled a loaded weapon out of her purse. She was
innocently explaining why she felt she didn't need extra
homeowner's insurance, to cover big $$ jewelry, in a
casualty loss issue. In other circumstances, that can get a
t/p in serious trouble, but her representative almost fell
out of her chair too, and I had to apologize for
laughing...but necessary to return the interview to
normalcy!

Fred F.

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Hi, Mallard again.
I don't have the receipts for the equipment because they
have been lost over time. I have no proof that I bought
these items any longer. (Sigh, live and learn).

I do have the equipment and used it during the time in
question. I still use the equipment now.

This is for a 2001 tax return. The person I had do my taxes
up until 2001 was really bad. He placed things like
equipment on the wrong lines of the return. (He placed this
under "property leased") This equipment was being
depreciated over several years and this was the first time
it had been questioned.

My situation today is that I have $76000 worth of equipment
that was probably worth at best $25,000 in 2001. Today it is
worth probably $10,000.

I need to produce some documentation, besides receipts, to
satisfy the IRS. I don't mind losing the true value of the
equipment, but I would like to deduct something for it. Is
there anything I can do today to satisfy this?

Even If I did "pick the equipment out of the trash", isn't
there a way to claim the equipment as a viable asset?

All thoughts are appreciated,
Mallard

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- quote -

What you have to do is establish the value of the property
on the date you placed them into service for the business,
and depreciate based on the lower of your cost or value on
date placed into service.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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TaxSrv wrote:
- quote -

But Fred; didn't you write that camera off as other on
schedule A? since you must have used it to take pictures of
those you audited. (grin)

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

Generally I'll go with a self prepared list of equipment,
purchase price, fmv and date acquired; mostly estimated of
course. And of course ask the burning question: "has any
of this ever been used in any other business?"

As you know, in Georgia counties, the tax appraiser wants
such a list for personal property tax purposes. Also when
incorporating it's necessary for the preceding owner
(whether a business or individual) to prepare a bill of sale
on the equipment.

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

No they are treated as being converted to business use. You
can depreciate the lower of cost or fair market value
depreciable assets converted from personal to business use.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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"Mallard" <my_it_dept[at]consultant.com> wrote:

- quote -

Although you have "a lot of equipment," you have no receipts
for any of it? Is this new equipment or personal use
equipment converted to business use?

You need a means of verifying the value on the date
equipment was put to business use. Critical information is
the date (not just the price/cost/value). If you have a copy
of warranty information that you mailed (with date of
purchase) or service contract(s) for the equipment, this
could establish a date of acquisition.

Given a date of acquisition, you have a chance of
establishing a retail value on or near that date. Your
credit card company, bank, or the store where purchased may
be able to provide supporting documentation for your
purchase. For example, copies of checks.

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my_it_dept[at]consultant.com (Mallard) wrote:

- quote -

Not sure what you mean by "deduct". Things like cameras,
computers, and software are fixed assets, and you depreciate
them. In lieu of depreciation, you can "Section 179"
equiopment you bought, writing off their full cost in the
first year of service.

If you mean you want to take a Section 179 expense for them,
then I think the auditor is right: you must have *bought*
the equipment for business use, and without the sales
receipt, you can't prove you did that.

You can't take personal-use equipment, transfer it to
business use, and Section 179 it. You can take such
equipment, capitalize it at fair market value when placed in
service, and depreciate or amortize it.

--
Chris Green

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- quote -

Their value is the value they had at the time you placed them in service to
the business, not what you paid for them. Example: You bought a computer
for personal use 5 years ago for $3000. You put it in business service in
2004. It is probably worth $250.

- quote -

So would I. Assuming you bought the stuff and put in
service right away, the receipts would be your best proof.
If you waited, perhaps the results of Ebay auctions for
similar equipment would be a good shot.

- quote -

Just do it. Use your best estimate of value on the
in-service date and go from there. The worst the IRS can do
is challenge you and you will be no worst off than if you
had not claimed the equipment at all.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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"Mallard" <my_it_dept[at]consultant.com> wrote

- quote -

For existing assets you had, that you begin to use in a
business, you depreciate them based on the lower of their
fair-market-value or their cost to you.

So if you had a camera that you might have bought 5 years
ago at $500, that is worth today, at best $250, then
depreciate it based on the $250. HAve documentation to
support the values you set things at. The same item for
sale in the paper, an appraisal from the camera store,
whatever.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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Mallard wrote:

- quote -

This former auditor wasn't that tough. The fair market
value on the date the stuff is converted to business use
controls, so the original receipt is irrelevant. You could
have scavenged the stuff from people's driveways on trash
pickup day, but if an item still works, it has some value.

Just make a descriptive list and use realistic values,
depreciating over 5 yrs. My 1997 digital camera, the first
of the 1 megapixel designs, cost $879 discounted. It's big,
clumsy, eats batteries voraciously, works really great, but
likely won't fetch $50 on eBay. Current eBay search of
completed sales shows $10-$36! Ouch....

Fred F.

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- quote -

Were they lost? Did you have them prior to going into
business? It is difficult to place into business property
items that you had prior to the business.

Carol
What can one expect of a day that begins with getting out of bed.

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Greetings,
This question is kind of complicated. I am not a CPA.
I own a very small business.
My job description is a s follows:
I install and maintain computer systems for companies. I
also take photos of the installations for use in
publications and brochures. I have a lot of equipment that I
have placed into use for this business that are my tools of
my trade (Cameras, computers, software, etc).

I want to deduct the value of these tools for my business,
but I don't have sales receipts for them any longer. I do
have the equipment and can produce them with serial numbers,
etc.

An auditor at the IRS has told me that unless I still have
the receipts, I can't deduct the equipment. I question that
statement as these items have obvious value.

Here is my question: I have the equipment. I use and need
the equipment for my work (There was never a question of
their use). Is there a way to deduct the equipment without
the receipts? If there is, what do I need to do to show
value? I use these items every day and could not do my job
without my tools.

Thanks in advance,
A small Business owner

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