Members of the Maryland Association of Certified Public...

Tax answers

March 19, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: If you buy a personal computer and printer for your home based business, what kind of tax deduction or depreciation can you claim? What about software?

A: If a computer and associated hardware are used exclusively in a qualified office in a residence (defined in code Sec. 280) and assuming business use is more than 50 percent, the taxpayer can depreciate the computer using the MACRS (Modified Accelerated Cost Recovery System) table for five year property. You may elect to expense the cost (subject to limitations) of the computer and associated hardware in the current year. If the computer is not used exclusively in a qualified office, the computer is considered "listed property," subject to stringent recordkeeping requirements, and certain limitations may apply to related depreciation and deductions. Computer software purchased separately may be amortized using a straight line method over a 36-month period. Software included in a computer purchase, if the cost of the software is not listed separately, will be depreciated using the same method as the computer. This assumes that Section 197 of the code does not apply. There are other current deductions allowable for qualified computers, such as: computer paper, toner, on-line service charges, related long-distance phone charges and others.

Q: My daughter got married in August. Can my husband and I claim her on our taxes for the first eight months of 1995?

A: The general rule is that a parent can claim a married child as a dependent only if the child does not file a joint return (with the spouse) and otherwise qualifies as a dependent. One exception to the general rule allows the exemption where neither the child nor his or her spouse is required to file a joint return for the year for the purpose of claiming a refund. In any case, you are not allowed to prorate an exemption for partial qualification.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers, should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone.

Pub Date: 3/19/96

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