What is Listed property?

Listed property refers to certain types of property that may be used for personal and business purposes.

For listed property, you're allowed to claim first-year expensing and accelerated MACRS only if business use exceeds 50%.

Tax law specifies the following as  listed property:

  • Passenger cars and other transportation vehicles
  • Cell phones
  • Computers and peripheral equipment
  • Boats
  • Airplanes
  • Any photographic, sound, or video recording equipment that could be used for entertainment or recreational purposes.

There are exceptions that remove the following items from the listed property category:

  • A computer or peripheral equipment that you own or lease that is used exclusively at a regular business establishment.
  • Photographic, phonographic, communications, or video equipment used exclusively and regularly in your business or regular business establishment.

Keep track of business and personal use:

You must be able support your business use for listed property.

If business use is 50% or less you must use ADS straight-line depreciation. You claim deductions for listed property on Form 4562, Part V.

If business use in the first year exceeds 50%, then in a later year drops to 50% or less, you must recapture any first-year expensing and accelerated MACRS claimed for all years prior to the year business used dropped.

Recaptured depreciation is added to income in the year business use dropped to 50% or less.

Do the following in the year business use drops to 50% or less:

  • Begin using ADS straight-line deprecation in the year business use drops and continue using it for the asset's the remaining recovery period or until the asset is disposed of, whichever comes first.
  • Recapture any first-year expensing and excess accelerated MACRS deductions.
  • Figure recapture on Form 4797.
  • To find excess accelerated MACRS:
    • First, figure your depreciation using ADS straight-line for the same years you claimed accelerated MACRS.
    • Next, subtract total straight-line depreciation you could have claimed for those years from total MACRS actually claimed for those same years.
      • The difference is the excess depreciation and is included in your gross income as other income.

A home office may be considered a regular business establishment if it is used exclusively and regularly for qualified business use (not managing your investments or other personal use).

Remember, the space used for business purposes may not be used sometimes for business and sometimes for personal use - it's all or nothing.

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