Joe Btfsplk wrote:

- quote -

I'm not "ultra" conservative, however 100$ is my threshold
for federal tax purposes, but not for accounting purposes,
since businesses have to file property tax returns and
include all equipment, sec 179 or no.

- quote -

Yes. In an audit where section 179 had not been timely
elected. If only 14.29% is deductible and client is in the
28% bracket, that's net revenue to the government of ....
500% x 86.71% .28 (sorry, it's been a long day; you can
do the math.

ChEAr$,
Harlan Lunsford, EA n LA

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Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:
- quote -

Sorry. My original message was not clear. When I said "the
Capital Equipment floor" I was referring to the amount set
by the company where I worked for their employees to use
when purchasing equipment. I know that the IRS has not set a
specific value.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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Victor Roberts wrote:

(snipped)
- quote -

If you ever find any official IRS pronouncements on the
subject, be sure to post whether it's 100$, 250$, 187$, or
whatever.

ChEAr$,
Harlan Lunsford, EA n LA

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"Joe Btfsplk" <taxxcpa[at]sbcglobal.net> wrote:

- quote -

I worked as an engineer for one of the largest corporations
in the US. Since they were such a large target, I believe
they carefully followed the tax law.

When I started way back in 1971, only durable items with a
cost over $100 were purchased as Capital Equipment, that is,
to be depreciated. Everything else was expensed as Office
Supplies or Small Tools & Equipment.

I believe the Capital Equipment floor has risen over the
years. It may be $250 by now. In addition, when the IRS
disallowed expensing of software, we had a special category
for all stand-alone software purchases and the software part
of computer equipment purchases.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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There was a lengthy discussion about depreciating low-cost
items in another forum. I brought up the point that I have
staplers that are good for 20 years that cost about $ 15.00
that would have to be depreciated if you followed the rules
to the letter. That would be a rediculous thing to do.

In general I think you would be safe in writing off anything
that cost under $ 500--or if you are ultra
conservative--anything that cost under $ 100.

Can anyone imagine and IRS agent increasing your tax by the
tax on a $ 500 item that you expensed.

Of course you could add another form to the return and write
it of as Sec 179 to get the same result since obviously your
wife won't exceed the limit on Sec 179 write-offs.

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- quote -

Generally, if off-the-shelf software has a useful life of a
year or more it is something that should be depreciated over
3 years (IRC 167(f)(1) in case you were interested).
However, off-the-shelf software can be expensed under IRC
179.

Josh

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Along with other more significant items, I learned about "de
minimus" 30 plus years ago.

Means a $140 item is not likely to be questioned.

However, it is perfectly safe to use Sec 179 expense which
will cover the whole problem.

Nan, EA in LA

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"Ian Pilcher" <i.pilcher[at]comcast.net> wrote

- quote -

The cost is capitalized and generally depreciated over 3
years, but it can be eligible for Section 179 deduction, so
it could be written off in the year purchased.

- quote -

http://www.irs.gov/publications/p946/ch01.html#d0e789
Computer software. Computer software includes all programs
designed to cause a computer to perform a desired function.
It also includes any data base or similar item in the public
domain and incidental to the operation of qualifying
software. Computer software is a section 197 intangible only
if you acquired it in connection with the acquisition of
assets constituting a business or a substantial part of a
business.

However, computer software is not a section 197 intangible
and can be depreciated, even if acquired in connection with
the acquisition of a business, if it meets all of the
following tests.

a.. It is readily available for purchase by the general public.

b.. It is subject to a nonexclusive license.

c.. It has not been substantially modified.

Note.
If the software meets the tests above, it may also qualify
for the section 179 deduction and the special depreciation
allowance, discussed later.

Computer software. If you can depreciate the cost of
computer software, use the straight line method over a
useful life of 36 months.

http://www.irs.gov/publications/p946/ch02.html#d0e2174

Off-the-shelf computer software. Off-the-shelf computer
software that is placed in service after 2002 is qualifying
property for purposes of the section 179 deduction. This is
computer software that is readily available for purchase by
the general public, is subject to a nonexclusive license,
and has not been substantially modified. It includes any
program designed to cause a computer to perform a desired
function. However, a database or similar item is not
considered computer software unless it is in the public
domain and is incidental to the operation of otherwise
qualifying software.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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My wife needs a copy of Windows for her home business. Is
the cost (approx. $140) deductible, or does is have to be
capitalized?

I've searched the IRS web site, and I can damned little
specific information.

Thanks!

--
================================================== ======================
Ian Pilcher i.pilcher[at]comcast.net
================================================== ======================

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