Deductions and Write-Offs
The most frequently asked tax questions related to Deductions and Write-Offs
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Answer Tax QuestionsDepreciation - definition
Asked Tuesday, October 03, 2000 by an anonymous user
Depreciation is the annual deduction allowed to recover the cost or other basis of business or investment property having a useful life of more than one year. Land is not depreciable.
Depreciation and amortization deductions are reported on IRS Form 4562.
Amortization
Asked Tuesday, October 03, 2000 by an anonymous user
Amortization is similar to the straight line method of depreciation in that an annual deduction is allowed to recover certain costs over a fixed period of time.
Examples of amortizable items are costs of starting a business, goodwill, customer lists, franchise fees, licenses, trademarks and certain other intangibles, reforestation and pollution control facilities. Amortization is reportable on IRS Form 4562.
Examples of amortizable items are costs of starting a business, goodwill, customer lists, franchise fees, licenses, trademarks and certain other intangibles, reforestation and pollution control facilities. Amortization is reportable on IRS Form 4562.
Depreciation - 179 expense election
Asked Tuesday, October 03, 2000 by an anonymous user
Generally, the maximum section 179 expense deduction is $500,000 for section 179 properties placed in service in 2013.
If you elect to expense section 179 property, you must reduce the amount on which you figure your depreciation or amortization deduction (including any special depreciation allowance) by the section 179 expense deduction.
You may elect to deduct all or part of the cost of certain qualifying property in the year you place the asset in service as opposed to recovering the cost over the assets useful life(depreciation). This choice is called a Section 179 Election.
Any disallowed amount in the current year may be carried over to future years.
The 179 deduction is reportable on IRS Form 4562. You can elect to expense part or all (up to $500,000) of the cost of section 179 property that you placed in service during the tax year and used predominantly (more than 50%) in your trade or business.
If you elect to expense section 179 property, you must reduce the amount on which you figure your depreciation or amortization deduction (including any special depreciation allowance) by the section 179 expense deduction.
You may elect to deduct all or part of the cost of certain qualifying property in the year you place the asset in service as opposed to recovering the cost over the assets useful life(depreciation). This choice is called a Section 179 Election.
Any disallowed amount in the current year may be carried over to future years.
The 179 deduction is reportable on IRS Form 4562. You can elect to expense part or all (up to $500,000) of the cost of section 179 property that you placed in service during the tax year and used predominantly (more than 50%) in your trade or business.
179 expense election - less than 50% use
Asked Tuesday, October 03, 2000 by an anonymous user
A section 179 expense can only be elected on property used 50% or more in a trade or business.
Depreciation - listed property
Asked Tuesday, October 03, 2000 by an anonymous user
Equipment that is used for personal and business purposes is called "listed property".
Listed property includes automobiles (weighing 6,000 lbs. or less), cellular telephones, computers and peripheral equipment,
property used for entertainment, recreation or amusement, such as boats, airplanes, and photographic, sound or video recording equipment.
There are certain limitations associated with listed property. Listed property deductions are reportable on IRS Form 4562, part 5.
Listed property includes automobiles (weighing 6,000 lbs. or less), cellular telephones, computers and peripheral equipment,
property used for entertainment, recreation or amusement, such as boats, airplanes, and photographic, sound or video recording equipment.
There are certain limitations associated with listed property. Listed property deductions are reportable on IRS Form 4562, part 5.
Depreciation - computer software
Asked Tuesday, October 03, 2000 by an anonymous user
Computer software used in a business or for investment purposes having a useful life of more than 1 year is depreciable over a 3 year life.
Are the total amount of my meals and entertainment deductible?
Asked Tuesday, October 03, 2000 by an anonymous user
While 100% is reportable, only 50% of meals and entertainment are deductible on your business expense forms. • Be sure to keep good records on who was present, the dates and times, and the reasons for the entertainment and business discussions that took place. You may not deduct costs of meals and entertainment for personal reasons while traveling. If the trip is "primarily" business, most expenses will be considered as business expenses. If the trip is "primarily" personal and you conduct some minimal business, only those costs directly related to the business you conduct may be deductible.
Can I claim a home office deduction if I own a Cooperative apartment ?
Asked Tuesday, October 03, 2000 by an anonymous user
Yes. If you meet the exclusive and regular use criteria, ownership of a cooperative apartment will qualify for a home office deduction. You may deduct depreciation based on your stock interest in the cooperative. Speak to your local CPA about your home office deductibility.
Depreciation - Real property
Asked Friday, September 29, 2000 by an anonymous user
Depreciable real property is categorized as section 1250 property. For sales of section 1250 property, the part of long-term capital gain attributed to depreciation is taxed at a maximum tax rate of 25% and reportable on IRS Schedule D.