List Computer in 2017 or 2018?

[ruthc]

I ordered a new computer in Nov. 2017. I paid a deposit in November. The computer was installed and used in late Dec. The final invoice came in 2018 and was paid for in January 2018. I am on a cash basis for taxes.
Would I post the sale in 2017 or 2018 seeing I paid for in 2018?

[ATSMAN]

I ordered a new computer in Nov. 2017. I paid a deposit in November. The computer was installed and used in late Dec. The final invoice came in 2018 and was paid for in January 2018. I am on a cash basis for taxes.
Would I post the sale in 2017 or 2018 seeing I paid for in 2018?

You partially paid for it in 2017 and put it to service in 2017, so if it helps take the deduction for 2017.

[Rapid Robert]

What was the amount of the deposit, and what was the amount paid with the invoice? Why not just report each amount in the year paid, surely this is within your book accounting (DMSH) expenditure amount.

[ruthc]

The amounts were....

I paid $750 as a deposit and $925 for the remainder in 2018. I really don't need the deduction for this year, but will in 2018. So I would rather use it for 2018.

[ttbtaxes]

For a cash-basis taxpayer, it is irrelevant when the asset was paid for pursuant to Reg. 1.461-1(a)(1). The computer was placed in service in 2017 and thus that is the year depreciation/expense commences. The $1,675 would be shown in 2017 and either depreciated or expensed.

[Gretel]

Interesting Question

For a cash-basis taxpayer, it is irrelevant when the asset was paid for pursuant to Reg. 1.461-1(a)(1). The computer was placed in service in 2017 and thus that is the year depreciation/expense commences. The $1,675 would be shown in 2017 and either depreciated or expensed.

I agree with the first part but am not sure if this is still true if treated as supply, computer being under $2,500.

[ttbtaxes]

I agree with the first part but am not sure if this is still true if treated as supply, computer being under $2,500.

In order to qualify as a material or supply, doesn't the unit of property have to have a useful life of less than 12 months? Take a look at Reg. 1.162-3(c)(1)(iii).

[Rapid Robert]

In order to qualify as a material or supply, doesn't the unit of property

De Minimis Safe Harbor election, item is expensed if company policy is to expense items under $2,500. 1.263(a)-1(f)

[ruthc]

Agree...

At this point, after reading everyone's response, I tend to agree with Robert. It was ready for use in 2017. Just because I didn't get the invoice until 2018, it was partially paid for in 2017. I will use the safe harbor election and put everything in 2017. Thank you everyone for your responses. have a great week!

[ttbtaxes]

Under what provision can you deduct all of it in 2017?

If you treat it as an depreciable asset, then, under Reg. 1.461-1(a)(1), you can entirely write it off in 2017 under Section 179 or through bonus depreciation. If you make the De Minimus election, then pursuant to Sec. 1.263(a)-1(f)(3)(iv) you've treated the computer neither as an asset nor a material and supply. Instead, when making the election, you agree to deduct it under Reg 1.162-1 in the taxable year the amounts are PAID provided the amounts otherwise constitute deductible ordinary and necessary expenses incurred in carrying on a trade or business.

Therefore, if you are treating it as a trade or business expense, only the amount paid in 2017 would be deductible, not the full amount, because you are a cash-basis taxpayer. Sec. 1.263(a)-1(f)(7) Example 9 discusses the treatment of the election as a trade or business expanse.

[Kram BergGold]

I agree with ttbtaxes

If you depreciate or claim 179 then you write off the entire cost.
If you use the safe harbor you only write off what you paid in 2017.

[ruthc]

Expense when paid!

Expensing the amount in each year paid with the safe harbor would work for me too. I wasn't sure what to do seeing it's for one computer, but 2 payments (each payment in different years). Thanks

[taxea]

I paid $750 as a deposit and $925 for the remainder in 2018. I really don't need the deduction for this year, but will in 2018. So I would rather use it for 2018.

Then put it in service 01/01/18 and take the depreciation/full deduction in 18

[ttbtaxes]

The OP told us she put it in service in 2017. How do you unring that bell?

[spanel]

My. 02. Since he had the computer in 2017 and placed it in service in 2017, it need to be listed 100% on the 2017 tax return.

What we had is a partial payment with a small Line of Credit, no different if he put the rest of it on a credit card.


Chris