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What is the best way to handle a 3 year warranty purchased with a laptop?

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    What is the best way to handle a 3 year warranty purchased with a laptop?

    Is $117 for a 3 year laptop warranty even deductible, since the laptop could have been used in the business without purchasing it? Why am I finding it so difficult to find good info on this?

    #2
    Originally posted by Coal View Post
    Is $117 for a 3 year laptop warranty even deductible, since the laptop could have been used in the business without purchasing it? Why am I finding it so difficult to find good info on this?
    Add it to the basis of the laptop when you depreciate it.

    Chris

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      #3
      Why not amortize over 36 months?

      Comment


        #4
        I agree with Gretel; it is probably supposed to be amortized over the life of the warranty.

        It may not be correct, but for that small amount, I would just deduct it all in one year.

        Comment


          #5
          Originally posted by TaxGuyBill
          I would just deduct it all in one year.
          So would I.
          Roland Slugg
          "I do what I can."

          Comment


            #6
            Originally posted by Roland Slugg View Post
            So would I.
            It gets allocated over three years if you are going to expense it.
            Believe nothing you have not personally researched and verified.

            Comment


              #7
              Originally posted by Coal View Post
              Is $117 for a 3 year laptop warranty even deductible, since the laptop could have been used in the business without purchasing it? Why am I finding it so difficult to find good info on this?
              You could run your tax business without purchasing E&O insurance, does that mean it's not deductible if you do purchase it?

              Here is a PLR that states extended warranties are insurance:



              And here is how the IRS handles its own purchases, it expenses extended warranties on laptops.

              "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

              Comment


                #8
                Originally posted by Rapid Robert View Post
                You could run your tax business without purchasing E&O insurance, does that mean it's not deductible if you do purchase it?

                Here is a PLR that states extended warranties are insurance:



                And here is how the IRS handles its own purchases, it expenses extended warranties on laptops.

                https://www.irs.gov/irm/part1/irm_01...6.html#d0e1484
                1 - Ruling you referenced:

                RULINGS
                ….. , This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

                Question: ruling states “..ruling is directed only to the taxpayer requesting it.” so would that apply here?

                2 - Question for below: Would this be how the IRS treats the Accounting treatment vs the Tax treatment?

                Your comment “And here is how the IRS handles its own purchases, it expenses extended warranties on laptops.”

                Excerpt from the IRS reference you posted:

                …..FASAB is responsible for promulgating accounting standards for the United States Government. These standards are recognized as generally accepted accounting principles (GAAP) for the Federal Government. To ensure compliance with FASAB, it is critical that the IRS complies with applicable Federal financial accounting standards for all property and equipment.

                3 -Have you looked at this Other reference (Sec. 461 All-Events Test:? Timing for Deducting Accrued Warranty Claims - See more at: http://www.thetaxadviser.com/issues/....8A3M0LDv.dpuf
                Always cite your source for support to defend your opinion

                Comment


                  #9
                  Warranty expense

                  I found this link that might help with the warranty.


                  Is Warranty cost capitalized or included in cost of the asset?
                  Warranty in simple words is a promise by the manufacturer to make good of your loss under certain conditions. This helps win customers’ confidence and is one of the major consideration in buyer’s purchase process. Warranty offers comes in different forms such as simple warrant, extended warranty, replacement warranty, repair warranty, life time warranty etc. […]

                  Comment


                    #10
                    Originally posted by mooretax View Post
                    I found this link that might help with the warranty.


                    Is Warranty cost capitalized or included in cost of the asset?
                    http://pakaccountants.com/is-warrant...-of-the-asset/
                    If you were doing GAAP. (IAS) right? Would you follow that for tax?
                    Always cite your source for support to defend your opinion

                    Comment


                      #11
                      I wasn't trying to establish substantial authority. I was mostly just responding to user Coal who said it was hard to find anything relevant to the question.
                      "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

                      Comment


                        #12
                        Originally posted by Rapid Robert View Post
                        I wasn't trying to establish substantial authority. I was mostly just responding to user Coal who said it was hard to find anything relevant to the question.
                        Yes, was just asking your comments on the questions if you had any.
                        Always cite your source for support to defend your opinion

                        Comment

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