DIY investment exps - itemized subject to 2%

[AZ-Tax]

TTB 4-26....seems to me the list is getting shorter. What happen to financial pubs, seminars, etc. I located this article from Smart Money. Here is a section that may apply to my client:

Part-Time Investor With Full-Time Job Outside the Home (Or No Job)
Obviously, this is the most common situation. You can deduct expenses directly related to investing activities, subject to the 2% of AGI. (As mentioned, expenses to generate tax-free income are nondeductible.)

If you use a home computer and peripheral equipment to manage your investments, you can depreciate the investment-use portion of the cost using the straight-line method 10% in the first year, 20% in years 2 through 5 and 10% in year 6. Like other investment expenses, the depreciation is "thrown in the pot" with your other miscellaneous itemized deductions and is then subject to the 2% of AGI.

Purchased software used for investment management can generally be written off over three years (or earlier if it becomes worthless). However, programs that are useful for one year or less should be fully written off in the year purchased.

Using your home office for investment management activities won't cut your taxes; only business usage (as opposed to investment usage) counts for this purpose.

http://www.smartmoney.com/taxes/income/writing-off-your-investment-costs-9539/

[FEDUKE404]

Investment expense games

The article you cited is from a magazine, so not really reliable "tax information."

There have always been folks who want to get creative with their investment expenses. They need to write off the internet costs (and the computer costs) because they check the value of their stocks each morning. And since the computer sits on a desk in their bedroom, obviously an office-in-home situation exists. They want to write off the newspaper, because it has a financial section. (OK - I can "blink" for allowing a WSJ subscription.) They own stock in Del Monte, and want to write off a trip to HI to "manage their investments."

I consider them a close cousin of the Amway/Mary Kay mindset - everything I do is business-related!

Because of the 2% haircut for miscellaneous deductions, this topic rarely comes up with my clients. But were it to do so, I would have no problem deducting legitimate investment costs, to include investment subscriptions, books, seminars, and the like. I would likely balk at someone wanting to write off MS Office or Excel software expenses, but would have no problem with software that analyzes stock market data/trends/etc.

But as for the average Joe Blow trying to convince me he can deduct his computer, internet costs, office-in-home, etc expenses as "investment related," he is going to have a very tough uphill climb with me.

FE