Can I Deduct My iPad?

Feb 22 2014, 12:12pm CST | by

Can I Deduct My iPad?
Photo Credit: Forbes Apple

As the tax season gets started, I’m seeing many clients that want to deduct their iPads. But are there any issues?

Now it’s true that an iPad is tremendously valuable for helping operate a business. Hey, you can track your accounting with Xero or Intuit’s QuickBooks. Or you can manage your CRM with Salesforce and keep up with your contacts on LinkedIn.

The uses are seemingly endless.

But of course, an iPad can offer lots of fun too, such as with games, movies or music. And this is where the IRS gets suspicious.

In fact, the agency considers the iPad to be listed property. This means it often has both a business and personal use.

The bottom line:  If you want to deduct the iPad, you must use it for your business for over 50% of the time.   Oh, and as for the deduction, you can only include this percentage. Example: You purchase the device for $499 and use it 80% for business. In this case, your allowable deduction is $399.

Now be careful. If you deduct 100%, this will probably be a red flag for the IRS. The fact is that you probably still use the device for personal purposes (yes, many business owners love to play “Candy Crush Saga”!)

What’s more, you can either deduct the amount in the current year (according to the rules of Section 179) or you can depreciate the value of the device over a period of time (five years). Of course, it all depends on your current tax situation, taking into account your expected losses or profits.

To get more details on depreciation — and the Section 179 deduction — you can also check out one of my recent posts on the topic.

Tom Taulli (@ttaulli) operates MasterCFO, which helps founders with accounting and taxes.  He is also the author of “How to Create the Next Facebook,” which is a step-by-step guide for creating a breakout startup.

Source: Forbes Apple

 
 

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