J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Limitations on Listed Property

Certain property is called listed property and is subject to special depreciation limits. Listed property includes:

• Cars
• Other transportation vehicles (including boats)
• Property generally used for entertainment, recreation, or amusement
• Computers and peripherals, unless used only at a regular business establishment owned or leased by the person operating the establishment. (A home office is treated as a business establishment.)

These are the only items considered listed property because they have been specified as such in the tax law. For example, fax machines and noncellular telephones are not treated as listed property.

NOTE

Cellular phones are no longer treated as listed property.

It is advisable to keep a log or other record for the use of listed property. This will help you show that business use is more than 50%. However, if you use listed property, such as a computer, in a home office whose expenses are deductible, the Tax Court says you do not need records. The reason: Recordkeeping for business use does not apply to computers used at a place of business (which includes a home office that is the principal place of business and that is used regularly and exclusively for that business).

NOTE

Weigh carefully an election to use ADS. If you make the election to use ADS, you cannot later change your mind.

If business use of listed property is not more than 50% during the year, the basic depreciation system cannot be used. In this ...