CELLULAR PHONES CAN BE A TAX TRAP
Cellular phones seem to be like mushrooms. They are popping up everywhere. If you're sporting one in your car or elsewhere, think of it as an auto or computer. Why? Well, in terms of the tax law, those little telephones are subject to the same special depreciation and record keeping rules. Ready! Here are the rules. Cellular telephones are not eligible for accelerated depreciation unless they are used more than 50 percent of the time in a qualified business use. But you can use straight-line depreciation (5-year life) if you miss the 50 percent target. No deduction is allowed, even if the phone is used for business, unless the business use is substantiated. No personal use, which would mean 100% business use, won't work either. Substantiation will make or break your deduction. When an employee uses a company phone for business, the employee must pay tax on the value of the use unless the business purpose is substantiated. Careful: This one is a double-edged sword. Suppose you don't provide your employer with the necessary proof (substantiation): First, the employer gets no deduction for even the legitimate business use; and second, you get socked with a tax on the value of the entire phone use. If you are willing to do it, this will get you home free: Keep a diary of all the business use of your cellular telephone. Mark down the date, time, and business purpose of each call. Want to learn how to capture every dollar of business expense you are entitled to under the law? Send for the triple-threat set of Special Reports, The Complete Guide to Building Your AUTOMOBILE Deductions, The Complete Guide to Building Your ENTERTAINMENT Deductions, The Complete Guide to Building Your TRAVEL Deductions, $25 each (or all three for $57), to Book Division, Blackman Kallick Bartelstein, LLP, 300 South Riverside Plaza, Chicago, IL 60606. Irv Blackman and Brian Whitlock are CPAs with Blackman Kallick Bartelstein, LLP in Chicago. Also lawyers, they specialize in business succession and wealth transfer and are sought-after speakers. Want to consult? Need a second opinion?...Call Irv or Brian, 312-207-1040.