You're only allowed to claim the Section 179 deduction on equipment purchased and put into business use during the same tax year. If you purchase business equipment one year, and then put it into business use in a subsequent year, you're required to depreciate that property over its useful life based on its fair market value the date its placed in business use. The useful life for computer equipment and cars is 5 years, and for most everything else, is 7 years.



If you earned some money as an independent contractor this year, you'll claim your allowable depreciation as a miscellaneous itemized deduction on the Schedule C. Otherwise, you'll lump your depreciation with your other business expenses, and claim them as a miscellaneous itemized deduction - which are only deductible to the extent they exceed 2% of your income.

--- --- --- --- --- --- --- --- ---

Replying to:

Quick question. I'm filling out section A (itemized dedcutions) for my federal taxes and was wondering if I could depreciate some office furniture/computer that I purchased in 2001. I was wondering if I can use the section 179 deduction. And second, if I can use the section 179 deduction, would I just lump this all under line 20 of the section A itemized deductions along with everything else such as (business use of the home, etc)?

Zip Code: cpa@mdtaxes.com