Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 1, 1993 TAG: 9301300009
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
ENTER NON-BUSINESS BAD DEBT ON SCHEDULE D
EDITOR'S NOTE: The Roanoke chapter of the Virginia Society of Certified Public Accountants is answering tax-related questions from our readers each Monday on the Money Page. Send them in writing to Tax Questions, in care of Mag Poff, Roanoke Times & World-News, P.O. Box 2491, Roanoke, Va. 24010.\ Q: I need information on how to file a loss to Resolution Trust Corp. for a deposit over the insured $100,000 that was lost when a savings and loan went under. I take the standard deduction, and the loss was $1,500. I am in the 15 percent tax bracket with income of about $20,000.
A: This loss would be treated as a non-business bad debt and would be entered as a short-term capital loss on Schedule D (form 1040), Capital Gains and Losses.
On Schedule D, part 1, line 1, column (a), enter the description of the certificate; in column (b) enter the date of the certificate; and in column (c) the date that the loss occurred. In column (d), under "sales price," list the amount of your recovery from the FSLIC (in your case $100,000). In column (e), under "cost or other basis," enter the face value of the certificate ($101,500). In column (f) under "loss," list the difference between column (d) and (e), which in this case is $1,500.
If you have no other capital gains or losses, enter this $1,500 amount as a negative number on lines 8, 19 and 20 of Schedule D. This amount will then be entered as a loss on page 1, line 13 of form 1040.
It appears that you would normally file form 1040A. However, in order to make the above computations, you will have to file form 1040.
Answered by J. Patrick Budd of Budd, Ammen & Co.
\ Q: As a free-lance photographer, my husband purchased two cameras which are used for nothing except his business. The trouble came when I did last year's return. The directions for the amortization schedule you are supposed to file with Schedule C said that cameras which are used totally for business use cannot be listed on that schedule. I couldn't find what schedule to use or where to show it, so I listed it on the general amortization form anyway.
How is this handled? I will be using straight-line amortization with a modest value left at the end of the period. Also, what length of time should I use for the camera's expected life? I used five years.
I am a free-lance writer. When I travel to research an article, I know my meals are subject to the limitation on business meal deductions. But if I eat somewhere specifically to critique the restaurant, often ordering far more than I would like and running up a large bill, is that 100 percent deductible as a research expense or is it subject to the limitation because it's a business meal? When my husband travels with me to take the pictures, and I sample his food and we discuss our impression of the service, decor and menu, is his meal in the same category as mine? I've been unable to find answers in books I've consulted.
A: The instructions for claiming depreciation on property used in a trade or business on Schedule C do not include a good definition of "listed property." Listed property includes assets, such as automobiles and computers, that lend themselves to personal use. These assets are to be listed on Part V of the form 4562, and the taxpayer must answer questions regarding usage of these assets for business purposes.
The instructions state that photographic equipment used exclusively in a taxpayer's trade or business is not "listed property" and therefore not subject to the rules pertaining to "listed property."
The instructions for determining the depreciative life of an asset refer the taxpayer to the table of recovery periods in Publication 534. Any property that does not have a class life and not otherwise classified in the table is deemed to be seven-year property. Since photographic equipment is not otherwise classified, the cameras should use a seven-year life.
As a tip to the taxpayer, the cost of tangible personal property, up to $10,000, used in the business may be expensed in the year acquired under Section 179 of the Internal Revenue Code, subject to certain limitations.
Code Section 274 lists several exceptions to the 80 percent deductibility of meals and entertainment. Unfortunately, meals consumed in the conduct of a trade or business is not one of the exceptions.
Answered by Gary Duerk of Brown, Edwards & Co.