Replies plus open-ended questions about computing devices interleaved below.


- quote -

Having the employer provide the tool is the best option for the
employee. Otherwise, if it is a computer peripheral device (see below),
to be deductible as an unreimbursed employee expense it would have to be
for your employer's convenience and required as a condition of
employment. Even then, it would still have to be depreciated, not expensed.

- quote -

But even if you don't opt out, if it is listed property and business use
later falls below 50%, the end result as the same as if you opted out,
right? So just let the listed property sit on the shelf for half a year
before disposing of it.

Straight-line depreciation is probably the optimum choice, all things
considered.


- quote -


If it is a digital camera and the raw images are processed only
subsequent to plugging it into your computer, it would be computer
peripheral equipment with 5-year property class life.

From Pub. 946: "A computer is a programmable, electronically activated
device capable of accepting information, applying prescribed processes
to the information, and supplying the results of those processes with or
without human intervention. It consists of a central processing unit
with extensive storage, logic, arithmetic, and control capabilities.

"Related peripheral equipment is any auxiliary machine which is designed
to be controlled by the central processing unit of a computer. "

(The pub goes on further to state that devices primarily for
entertainment or amusement are not computers).

Everything in this definition is pretty clear to me except
"programmable". Does that mean, programmable by the end user, or simply
programmable by someone? If I can make extensive adjustments to settings
via a menu system that requires a user manual to fully comprehend, is
the device programmable? Or, as another example, when Science Officer
Spock of Starship Enterprise issues the command "Computer, compute to
the last digit the value of pi", is he programming it? (I ask this
question in anticipation of voice-activated personal digital devices
becoming common someday soon...)

As for peripheral equipment, does it mean *only* controlled by the CPU
of a computer, or can it optionally be operated stand-alone? As a
simple example, I have a combo printer/copier/scanner/fax which connects
to my computer and is controlled by software on my computer, but also
performs significant functions when not connected. The digital camera
falls into this same category, IMO.

-Mark Bole

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In article <7805830a-0482-4f73-af6b-974b6381ab73[at]o4g2000pra.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -




Not only is 179 a possible option, but Sec 168k special 50%
Bonus Depreciation is the default, and you have to actively
elect to opt out of bonus depreciation :^( I predict that
will hit a lot of small businesses who use do-it-yourself
tax prep.









- quote -






What makes a camera 3 year property? Is it livestock? Racehorses?
Tractor rigs?


I have not looked it up, but unlessa camera is specifically called
out as 3 or 5 year property, there is no authority to call it other
than 7 yr property.

- quote -



ArtKamlet at a o l dot c o m Columbus OH K2PZH

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On Nov 15, 2:41 pm, Caonex <ivan.fi...[at]gmail.com> wrote:

- quote -

If you're using the camera for your work only, try to get your
employer to reimburse you for it (but they might only do this if they
get to own the asset afterwards and you use it 100% for their business
though they will tolerate personal use). You can, of course, deduct
it on your own tax return, but any deductions are subject to the 2% of
AGI limit, meaning that only deductions above 2% of your AGI are
deductible, which often makes the deduction worthless.

If you're planning to use the camera for freelance work, then you're
basically starting your own business. You report income and expenses
on Schedule C. However, be sure to read the rules about "business
versus hobby". It's a very common search term, and you'll find lots
of info on the internet. Basically, if you're in a hobby, then
expenses are limited because of the 2% of AGI rule. Generally, your
business should show a profit in 3 of 5 years, and you should always
keep good books and intend to make a profit.

Now, assuming you meet the conditions above, then you can deduct the
camera on Schedule C. But because the camera is an asset, it has to
be depreciated, usually over 5 years. To simplify the return for
state and federal AMT purposes, you can take straight line
depreciation over 5 years. But be aware that there is accelerated
depreciation, and section 179 depreciation. I'm not expert on
depreciation, so hopefully others will answer. The IRS publication is
946. I'm not sure if you have to use a certain method, like straight
line, accelerated.

It's possible to think of a camera as 3 year property, as digital
camera become obsolete easily. You could probably take 3 year
depreciation, but be prepared to answer questions from the IRS.

A camera is most likely listed property, because you can use it for
personal use. So you have to follow special rules. One of them, if
I'm not mistaken, is listing the item on form 4562 each year you file
the tax return.

Also, you have to allocate the use of the camera between business and
personal use. Only the business portion is deductible. If you used
the camera 40% for business, then only 40% of the depreciation is
deductible. When the business use is below 50%, section 179 is not
possible, and if you took section 179 in a previous year, you have to
untake or recapture it.

Finally, be aware that when you dispose of the camera there may be tax
due because of depreciation recapture.




- quote -

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Hello,

I am a Software Engineer and from time to time, at work, we buy
pictures for the websites that we develop and hire photographers for
taking pictures for advertisements. I have always had a huge interest
in photography and recently started reading a lot of books to educate
myself as much as possible to do it for both enhance offerings at work
and also do some freelancing.

Every year when I get my Christmas bonus a lot of it goes to taxes and
whatnot. I could use a small portion of the taxes to buy a nice
professional camera with an additional set of lenses especially for
portraits for use in my profession and as a freelancer. I have been
reading that useful and legitimate business expenses that an
individual does not get reimbursed from their companies can be claimed
in the individual’s personal taxes. I have been wondering if I could
do that with the camera that I want because of what I am planning to
do with it. As a freelance-photographer-to-be could I also claim it,
especially since I will be including whatever income I get from this
in my personal taxes for 2009?

An example of what I could do at work is that when a customer wants to
include a picture of their staff or building for that matter, I would
be able to do it if I had the equipment. Also, when making brochures
and flyers for customers from the company of for other people who
would pay me for it as a freelancer, a good camera would be essential
to produce pictures with enough resolution to be able to work with.
Another thing I would like to do is generate revenues online in blogs
by doing photoblogging and perhaps selling some of the work that I
would be able to achieve.

I would appreciate any advise or help anybody can provide to guide me
in this matter. I am a person that likes to play by the rules and want
to make sure that what I am thinking is legal.

Thanks in advance,

Caonex

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >