Posted on 04/08/2022 1:01:14 PM PDT by Cedar
Doing taxes for a relative, first year small business at home. Needing to know where to put entire purchase cost of (used) computer and software for the business.
He purchased the computer from his previous employer; this is the computer he used while employed with employer. So according to IRS, it cannot be put under Bonus Depreciation since he himself used it before:
"The used property requirement is met if the acquisition of the used property by the taxpayer meets the following five requirements: (a) the property was not used by the taxpayer or a predecessor at any time prior to such acquisition..."
So, does that mean the only other option to list the entire cost of the computer is by using Section 179 and filling out Form 4562? Or can I list the computer and software under Schedule C, Part V, Other Expenses (please let it be so!!!)?
This is for tax year 2021. I'm wanting to take the entire cost (and hoping I can avoid Form 4562).
> Ask 7 different tax experts and get 9 different answers. Six of which which will be correct.
Also, 5 will be incorrect.🥴
Used employer equipment does not constitute used by him. Used by him would be if it were his own personal property
This. And ditto the depreciation advice, do all this year for that item.
Good luck. I managed to navigate my way through the capital gains schedule based on my home sale in my former state of Maryland from last November. Luckily, I ultimately turned out to owe 0 in capital gains, but I was also lucky to get through the documents (written in bureaucratic Sanskrit) so I could properly figure things out.
Thanks. Glad things went well for you!
The tax code is a monstrosity. Hundreds of billions of dollars wasted annually on compliance costs, that could instead have been economically productive labor. Scrap it all.
Just make it up as you go along
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