Is a Computer Deductible?

by Rob Seltzer, CPA
Q.: May I write off a computer or computer parts as a deduction for working in the video game industry?

A: Yes, you may. I assume that you are self-employed or are working as a consultant and that you use the computer exclusively for development of video game programs. If that is the case, then the computer and peripherals or other computer parts would be considered "tools of the trade." So you may deduct the purchase costs in the tax year the items were first placed into service.

If the equipment you are referring to is your home system and not used for work purposes (i.e., you are not doing video game programming or development on the system), then you may not deduct the equipment's cost even though you work in the video game industry.

The rules for business deductions are complex--especially if you use the same equipment for both business and personal activities. In such situations, it may be possible to deduct part of the cost of the equipment. And instead of making a onetime deduction of the purchase price, you could choose to recover the entire cost of the equipment through depreciation. You can learn more by checking IRS publications 587 (Business Use of Your Home) and 949 (How to Depreciate Property).

A CPA could help you take all the deductions and depreciations you are entitled to as well as provide advice on how to better manage your business and personal financial affairs.

Rob Seltzer, CPA, is a sole practitioner based in Beverly Hills, Calif. You can reach him at rsscpa@earthlink.net or (310) 278-9944.