NOT taking a depreciation deduction

[golish]

I have several personal assets which I’ll put into business use this year. Given that these are relatively low value, they most probably will be used for business less than 50% of the time and most of them fall under listed property, is it OK for me to decide not to track depreciation and take that deduction? In my mind, the value of simplifying bookkeeping and taxes is greater than what I’d get by taking the depreciation deduction for these assets.

Thanks!

[Carl]

When it comes to business assets you really don't have a choice of depreciating or not. If required to depreciate and you do not, then when you sell or otherwise dispose of the asset you are required to reduce it's cost basis by the amount of depreciation you "should" have taken.  Now if you are required to depreciate the property, the program will know, based on the data you enter. If you lie to the program then in time (generally 24-36 months after filing) the IRS will catch it.

[golish]

Thanks for the answer but I think I need a little clarification. First of all, these aren’t strictly business assets - we’re talking about mixed-use assets which are used predominantly for personal purposes (think mobile phone, laptop or a camera used more for hobby than business purposes). I understand the recapturing part but doesn’t that only apply if I treat the sale/disposal as business profit/loss? The way I’m thinking is that if I weren’t self-employed, selling of e.g. the same mobile phone wouldn’t be reportable income so why does it become a tracking & reporting nightmare if I start to use it for business e.g. 30% of the time?

Edit: it would also be interesting to understand the differences (if any) for assets that are worth less than the de minimis threshold of $2,500 vs the one worth more.

[Carl]

"Mobile phone, laptop or camera used more for hobby than business purposes"

All of those items fall under the $2500 threshold for safe harbor. Just expense them and be done with it.  Besides, those items are depreciated over 7 years under MACRS GDS, and depreciating a $250 phone over 7 years will make absolutely no difference to your tax liability.  Also remember that if those items were placed in service after 2017, then they no longer fall under the perview of listed property per IRS Publication 946, page 2.