Cell phone deductions and other listed property.

• Author: Koppel, Michael D.
• Position: Expenses

Most professionals report business deductions for use of their automobiles, lap-top computers and cell phones. Often, the deductions are based on estimates rather than actual usage logs. For normal business expenses, approximations are acceptable if taxpayers have reasonable collateral evidence and the expenses are ordinary and necessary. For property that could also be used for personal purposes (defined as listed property in Sec. 280F(d)(4)), the use of estimates for documenting business use is unacceptable. Unfortunately, automobiles, lap-top computers and cell phones are all listed property.

To claim a business deduction for listed property, taxpayers must follow the Sec. 274(d) substantiation rules. They must be able to substantiate the amount of the expenditure or use, the time and place of the expenditure or use and its business purpose. Under Temp. Regs. Sec. 1.274-5T(c), taxpayers can substantiate an expenditure or use with a written log or a sampling supported by...