Computer Equipment & Depreciation in Small Business

[Lilab]

I bought a new MacBook Pro this year and some computer equipment over $200, and I have a single member LLC that made ~$26k doing consulting, but researching how computer equipment works on taxes is really overwhelming.

Bought:

• New MacBook bought in October from Apple cost $2,763.05. I probably use it ~60% for business use, ~40% for personal use.

• With the purchase, I traded in my old MacBook to Apple, and I got $337.60 from the trade in. This wasn’t taken off on the purchase receipt of the new MBP. Rather I bought the new machine and was charged the full amount. They mailed me a box for trade in, and I received a credit on the same credit card for the trade in amount 2 weeks later after it was verified.

• Applecare - $105.49 paid once a year.

• A dock/hub - $316.45

• An ergonomic keyboard - $365.00

Questions:

1. Which type of depreciation is used for each of these items? There seem to be at least 3 things -- accelerated depreciation, section 179, bonus depreciation -- or more which could apply.

2. How does the trade-in factor in? Is it seen as me selling my old computer making it income? Or does it reduce the total cost of the new MBP even though the trade in amount was received much later? Something else entirely?

3. I understand there is a years-in-service aspect to equipment that I don’t fully understand. I generally buy a new computer every 3 years, though it seems like computer equipment is depreciated over 5 years? How does this work?

4. If I use my computer 60% work / 40% personal, do I need to get so granular as to split the AppleCare cost as well?

5. Does all this apply to the dock and keyboard as well (which were not purchased with the computer)?

6. Is Quickbooks Self Employed an adequate product to handle the above for me, or do I need to get a higher plan?

I apologize I'm a total newb at this! I’ve tried to read through the IRS documentation but it seems complicated and I don’t know what I don’t know. 

[tagteam · Accepted solution]

You would use the purchase price less any allowance for a trade-in (i.e., use what you actually paid).

Given your scenario, you might want to consider bonus depreciation but, regardless, let the program do the work for you by entering the assets in the Business Assets section of the program.