Listed Property For Tax Purposes

An individual will frequently own property that he or she uses both for business and personal purposes. For example a divorce lawyer may use his car to run errands on weekends and to commute to his office every day (which is considered personal use) and also to drive to the court house or to meet clients ( which is considered personal use.) The general rule is that the person can take a depreciation tax deduction on the cost of the property for whatever percentage the property is used for business.

However, for certain property, which Congress suspects will lead to abuse, the taxpayer can only take straightline depreciation on the percentage of the cost attributed to business. He is also prohibited from expensing the cost or taking bonus depreciation. He is however free to claim a mileage allowance on the business use of a car, which is available to taxpayers in lieu of actual expenses including depreciation. The items covered by these special rules are known as listed property, and the restrictions apply in cases where business use of the property is less than 50%.

Listed property includes automobiles and certain other means of transportation, computers and peripheral equipment not used exclusively at taxpayer’s regular business establishment, and property used primarily for entertainment or recreation.