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Old 03-02-2008, 02:00 PM
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Cool What is the best way to deduct a new computer that I bought for my business in 2007?

I would appreciate your opinion on what would be the best depreciation method or way that I can deduct a new computer that I bought for 100% business use for the tax year 2007?

The cost of the computer system is $1,400.


Thanks..



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Old 03-07-2008, 10:20 AM
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What is the best way to deduct a new computer that I bought for my business in 2007?

There are 2 ways that you can select the deduction.

1. If your business is profitable and has profits in excess of $1,400:
If your business has a profit of over $1,400, then I would suggest that you take a section 179 deduction, that will allow you to write off the entire cost of the computer. The effect of this is offset your profit with a deduction of $1,400.

This special provision will allow you to report a deduction of the entire $1,400 on Form 4562.

2. If your business is making a loss and you have no other earned income available to the extent of the s179 Deduction:
If your business is making a loss, generally, the taxpayer would be depreciating the computer equipment over 5 years, the applicable period. The IRS have published methods you can choose, some are straight line depreciation other include the MACRS method. The MACRS method is the most favored method that you should select, as it provides an (modified) accelerated method of depreciation.

This means that taxpayers will be able to deduct a higher depreciation in the early years than the later years, and generally, this method will produce a depreciation that is generally 200% more than straight line method in the early years of the asset. Overall, the asset cannot be depreciated for more than its cost!

This depreciation deduction will be reported as a deduction on Form 4562.

For 2007, for your information, the IRS has set a limit of $125,000 for electing the Section 179 Deduction, subject to certain limitations of course.

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Old 03-08-2008, 11:09 PM
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What is the best way to deduct a new computer that I bought for my business in 2007?

I really want to thank you for providing me such a detailed response! I really found your answer very useful, and for you information, I do have a profit in excess of $1,400 so that I will be able to deduct the entire cost of the the new computer in 2007.

But, clearly, you provided both the scenarios! Great Answer..

Btw, I have provided your website to all my friends and family members, I think the site is quite unique & extremely informative. Thank you again!

Keep it up!!



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