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Old 04-03-2014, 02:04 PM
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Cell phone purchase

I understand that recently the IRS decided to no longer consider cell phones as "listed property." But may I still deduct the purchase cost under section 179? The phone was purchased new in 2013 and also placed in service in 2013 and is used 60% for my business. Where and how on form 4562 should I include the purchase of my cell phone? I would prefer to deduct the entire amount (60%) this year, but I am also concerned about creating a red flag for my return.

Thanks!



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Old 04-04-2014, 12:38 AM
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Originally Posted by AlSimmons View Post
I understand that recently the IRS decided to no longer consider cell phones as "listed property." But may I still deduct the purchase cost under section 179? The phone was purchased new in 2013 and also placed in service in 2013 and is used 60% for my business. Where and how on form 4562 should I include the purchase of my cell phone? I would prefer to deduct the entire amount (60%) this year, but I am also concerned about creating a red flag for my return.

Thanks!

I understand that recently the IRS decided to no longer consider cell phones as "listed property." But may I still deduct the purchase cost under section 179? ======= Effective for taxable years ending after Dec 31, 2009, the new legislation removed cell phones from the listed property rules. So, employers may deduct the cost of providing cell phones to their employees for employment-related business use without having to satisfy the strict substantiation requirements for listed property. The act also makes it easier for employees to claim deductions for their personal cell phones if used for job-related purposes .When business use exceeds 50%, the cost of the phone is typically written off as a 179 deduction. You may be able to deduct the purchase of a cell phone under Section 179 of the IRS code. Using section 179, you may deduct the whole purchase price in the year that you purchased it for business use. If you sell, exchange, or otherwise dispose of section 179 property, you may have to treat all or part of the gain as ordinary income I guess as sec 1245 recapture.

The phone was purchased new in 2013 and also placed in service in 2013 and is used 60% for my business. Where and how on form 4562 should I include the purchase of my cell phone? ============= You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797.

I would prefer to deduct the entire amount (60%) this year, but I am also concerned about creating a red flag for my return.================as mentioned above;



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Old 04-04-2014, 02:53 AM
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Thanks! This is just what I needed to know!

So, just to clarify, do I put the cost of the phone on the FRONT of form 4562 under line #6? And if so, what's the difference between columns B and C for line 6? On the back of form 4562, under listed property, there's a column where I could write that I use it only 60% for business. But if I SHOULDN'T put the phone under listed property (which it sounds like I shouldn't, according to your answer), then where do I list that it's only 60% for business?

Thanks again!



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Old 04-04-2014, 10:15 PM
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Originally Posted by AlSimmons View Post
Thanks! This is just what I needed to know!

So, just to clarify, do I put the cost of the phone on the FRONT of form 4562 under line #6? And if so, what's the difference between columns B and C for line 6? On the back of form 4562, under listed property, there's a column where I could write that I use it only 60% for business. But if I SHOULDN'T put the phone under listed property (which it sounds like I shouldn't, according to your answer), then where do I list that it's only 60% for business?

Thanks again!
So, just to clarify, do I put the cost of the phone on the FRONT of form 4562 under line #6? =============correct.

And if so, what's the difference between columns B and C for line 6? ===============same value cost of your cell phione. You need to report orginal cost of the cell phone in b;if you elect the whole cost to expense, thenput it in c.

On the back of form 4562, under listed property, there's a column where I could write that I use it only 60% for business. But if I SHOULDN'T put the phone under listed property (which it sounds like I shouldn't, according to your answer), then where do I list that it's only 60% for business?========only when you claim exp on listed pty, you need to provide te info inpart 5. Biz provided cell phones are no longer considered listed pty after 2009.



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Old 04-05-2014, 03:03 AM
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Thanks so much. One more point to clarify... (I'm sorry if this seems like I'm being obtuse, but this form, and depreciation in general, really confuse me. I sincerely appreciate your help!)

(I also want to clarify that the phone is a personal cell phone that was not given to me by an employer. I am self-employed, and I use this personal phone, which I bought and placed into service in 2013, for business use 60% of the time I use the phone.)

You said "You need to report orginal cost of the cell phone in b;if you elect the whole cost to expense, thenput it in c."

That makes it sound like I should put the TOTAL ORIGINAL COST of the cell phone in column B. But the form seems to indicate that I should only put the business portion (in my case, 60%) of the original cost in column B. Then I can choose how much of that portion I elect to expense in column C. For example, if the phone originally cost $400 total, but I only use it 60% for business, then I should put $240 in column B and if I want to expense all of that $240, then I put $240 in column C, too. Does that sound right? Even though there's nowhere to enter the number "60%."

In fact, the heading for column B says: "Cost (business use only)". Doesn't that seem to imply that I shouldn't put the total original cost there... just the business portion?

I thought the only reason to have a difference between columns B & C would be if you want to expense part of the cost as 179 and the rest in some other fashion. Isn't it incorrect to say that column B should be the total cost and column C is the business portion of that cost you want to expense? Again, I'm not trying to correct you... I'm just trying to make sure I understand.

Thanks again, and I really appreciate your patience.


Last edited by AlSimmons : 04-05-2014 at 03:16 AM.


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Old 04-05-2014, 03:15 AM
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Originally Posted by AlSimmons View Post
Thanks so much. One more point to clarify... (I'm sorry if this seems like I'm being obtuse, but this form, and depreciation in general, really confuse me. I sincerely appreciate your help!)

You say "You need to report orginal cost of the cell phone in b;if you elect the whole cost to expense, thenput it in c."

That makes it sound like I should put the TOTAL ORIGINAL COST of the cell phone in column B. But my understanding is that I should only put the business portion (in my case, 60%) of the original cost in column B. Then I can choose how much of that portion I elect to expense in column C. For example, if the phone originally cost $400 total, but I only use it 60% for business, then I should put $240 in column B and if I want to expense all of that $240, then I put $240 in column C, too. Does that sound right?

In fact, the heading for column B says: "Cost (business use only)". Doesn't that seem to imply that I shouldn't put the total original cost there... just the business portion?

I thought the only reason to have a difference between columns B & C would be if you want to expense part of the cost as 179 and the rest in some other fashion. Isn't it incorrect to say that column B should be the total cost and column C is the business portion of that cost you want to expense?

Thanks again, and I really appreciate your patience.
As you know, you must use the phone more than 50% for business to claim any section 179 deduction. As you used it 60% for business, multiply the cost of the phone by the percentage of biz use. The result is the cost of the property that can qualify for the section 179 deduction. Say,youb purchased a car in April 2003 for $400 and you used it 60% for business. The total cost of your phone that qualifies for the section 179 deduction is $240 ($400 cost × 60% ).



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Old 04-05-2014, 03:40 AM
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Originally Posted by Wnhough View Post
As you know, you must use the phone more than 50% for business to claim any section 179 deduction. As you used it 60% for business, multiply the cost of the phone by the percentage of biz use. The result is the cost of the property that can qualify for the section 179 deduction. Say,youb purchased a car in April 2003 for $400 and you used it 60% for business. The total cost of your phone that qualifies for the section 179 deduction is $240 ($400 cost × 60% ).
Perfect. Thanks.

The only question of mine that you didn't answer was about columns B & C. In your example above, I would put $240 in column B and if I choose to expense the full $240, then I would put $240 in column C also, right?

Also, and please answer this too, the "60%" will never appear on the form, right? The IRS will never know the full original cost of the phone or the percentage I used to calculate the amount doing it this way. Are they just taking me at my word? All they will see is the number $240... they won't know if that's 60% of $400 or 96% of $250. Won't that be a red flag?



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