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

[Coal]

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?

[spanel]

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

[Gretel]

Why not amortize over 36 months?

[TaxGuyBill]

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.

[Roland Slugg]

I would just deduct it all in one year.

So would I.

[taxea]

So would I.

It gets allocated over three years if you are going to expense it.

[Rapid Robert]

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:

https://www.irs.gov/pub/irs-wd/1419007.pdf

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

https://www.irs.gov/irm/part1/irm_01-035-006.html#d0e1484

[TAXNJ]

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:

https://www.irs.gov/pub/irs-wd/1419007.pdf

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

[mooretax]

Warranty expense

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-warranty-cost-capitalized-or-included-in-cost-of-the-asset/

[TAXNJ]

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?

[Rapid Robert]

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.

[TAXNJ]

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.