LIMITATIONS ON CLAIMING COMPUTER DEDUCTION

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 15, 1993                   TAG: 9302130005
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium
LIMITATIONS ON CLAIMING COMPUTER DEDUCTION
EDITOR'S NOTE: The Roanoke chapter of the Virginia Society of Certified Public Accountants will answer tax-related questions from our readers in a special feature on the Monday 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: My wife is a college professor. I am not employed. We itemize deductions.
I would like to know whether we can claim a deduction for the depreciation on a home computer as a professional expense of a college professor. I also use the computer for investment purposes. Our combined computer usage for these purposes is 75 percent of total usage. The computer is 5 years old and cost $3,000. No depreciation has been claimed up to now.
A: It is doubtful if depreciation of the computer will give you any tax benefits because of the various limitations that apply to this type of deduction.
In order for an employee to claim a deduction for a personal computer, the computer must be (1) for the convenience of the employer and (2) required as a condition of employment.
If you meet these two conditions, you may claim depreciation as an employee business expense. The depreciation deduction will be a percentage of the fair market value of the computer on the day it was converted from personal use to business use. If you converted your computer to business use when it was 5 years old, the fair market value probably was not very high, and your depreciation deduction will be low. Depreciation also may be limited by the percentage of business use.
Employee business expenses are miscellaneous itemized deductions on Schedule A. Your total miscellaneous deductions are deductible only to the extent that they exceed 2 percent of your adjusted gross income. Total itemized deductions may be limited again if your adjusted gross income is more than $105,250.
IRS publications 529, Miscellaneous Deductions, and 534, Depreciation, explain the rules in greater detail, show examples and give you the depreciation rates allowed. Both of these publications are free and can be ordered by mail or by calling 1-800-829-3676.
Answered by Melinda T. Chitwood of Brown, Edwards & Co.

by Archana Subramaniam by CNB