Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!linus!genrad!decvax!harpo!floyd!vax135!ariel!houti!hogpc!houxm!ihnp4!stolaf!umn-cs!smith From: smith@umn-cs.UUCP Newsgroups: net.taxes Subject: Re: Deduction questions... - (nf) Message-ID: <271@umn-cs.UUCP> Date: Sun, 5-Jun-83 21:19:31 EDT Article-I.D.: umn-cs.271 Posted: Sun Jun 5 21:19:31 1983 Date-Received: Tue, 7-Jun-83 21:55:38 EDT Lines: 30 #R:ihuxx:-31400:umn-cs:10500004:000:1388 umn-cs!smith Jan 20 13:04:00 1983 When I first approached the problem a few years ago I looked very carefully into deducting the computer cost as an "educational expense" as mentioned in your Case I. Superficially it sounds like a good idea, but the books made me doubt its validity as a deduction. The IRS sets great store by the phrase "ordinary and necessary" and few people have gotten away with deducting expenses other than tuition, books, paper supplies, and maybe transportation. Maybe the new wave of purchase requirements by colleges will someday change this, but it's hard to tell. It would be interesting to know if, for instance, the IRS sees a typewriter as a "necesary" college expense. I used your Case II (deduct depreciated cost) and took it as a business expense ("calculating equipment used for professional purposes"). Ditto for the investment tax credit. Since then I've had consulting work and have deducted depreciation from Schedule C. I'm getting more equipment this year and plan to just write it all off using your Case III. I haven't really read the new rules, but what I have heard makes me think it will apply. The only weird issue I know of here is that of proving to the IRS that you're really in business. Things get pretty sticky if your hardware costs exceed your income, and do so regularly. That's the only advantage I can see to depreciating these days. Rick.