'Tis the tax season, and with it come the tax questions. I have two instances where I am not sure where I fall in the grey area between t/s write-off and t/s depreciation:

1. Bikes
We have purchased a few bicycles that are used by both the daycare children and my children. One of the bicycles was $185 and one was $100. My question is, since these are over $100 and expect to have a life of longer than a year, would I depreciate these? Or since they are in the 'Toy' category, can I write them off in one year?

2. Electronics
We have purchased an iPhone ($185 after plan discounts) and iPod ($225) which are jointly used inside and outside of the daycare (the phone being used as the only phone for the business).
Since these were over $100 but I don't anticipate them being used for longer than a year without being replaced, should they be written off or depreciated?

Thanks!

Reply

Deduct the $100 bike in one year. Depreciate the $185 bike over 7 years. If the $185 bike is new, use the 50% bonus rule. If you use it more than 50% in your business, use the Section 179 rule.

Depreciate the phone and ipad over 5 years. If either are replaced before then, claim the remaining depreciation.

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