Business Use of Cell Phone Record-Keeping Required

Cell phones are used all the time in business. What many people don’t know is that tax deductions for business use of cellular phones are not guaranteed. Since cellular telephones are "Listed Property" under Internal Revenue Code Sections 274 and 280F, the IRS can require taxpayers to produce detailed records to justify the business tax deductions. Tax regulations require evidence of the amount, date/time, and the business purpose of each business use of a cellular phone. Most expenses other than the purchase of the phone will be listed on your cellular phone bills, which will provide the dollar amounts and dates/times of usage. However, the law technically requires taxpayers to prove the business purpose of each call. Although this is an unreasonably burdensome record-keeping requirement, it is the letter of the law. Luckily, this may change this year. Commissioner of the IRS Douglas Shulman recently stated that he is optimistic that Congress will pass a law this year so that personal use of employer-provided cell phones is not taxable.

Energy Efficient Home Improvements Tax Credit

The new stimulus law, the American Recovery and Reinvestment Act of 2009, signed into law by President Obama on Feb. 17, provides homeowners more tax credits for energy efficient home improvements. Previously, the credit was 10% with a lifetime maximum of $500 and ended after 2009. Now a credit can be claimed on 2009 and 2010 purchases and the maximum is $1,500 for 2009 and 2010 combined.

Bonus Depreciation Under the New Tax Act

Businesses can deduct 50% of the cost of most types of new property other than buildings. Used property does not qualify. Ordinary depreciation is deducted on the remainder of the cost basis, so total first year depreciation deduction is more than 50%. Alternatively, the Section 179 expense election can be used to deduct the entire cost of the property in the first year, if the taxpayer qualifies.

60-Day IRA Rollover Extended

IRS waived 60-day rollover requirement for failure to roll over funds within 60 days because medical condition impacted taxpayer’s ability to manage his financial affairs. – San Diego CPA Michael Fitzsimmons