Question:   Can the entire acquisition cost of a computer that I purchased for my business be deducted as a business expense or do I have to use depreciation?

Answer:   The acquisition cost of a computer purchased for business use:

• Can be expensed under Code section 179 in the first year, if qualified, by electing to recover all or part of the cost up to a dollar limit, by deducting it in the year you place the property in service, and any remaining cost is depreciated over 5 years.
• Can be depreciated over a 5-year recovery period.
• May be eligible for a 50-percent special depreciation allowance if the computer meets certain conditions.

NOTE:  Increased section 179 limits. The maximum section 179 deduction you can elect for qualified property placed in service in 2008 has increased to $250,000 ($285,000, for qualified zone and qualified renewal property). This limit is reduced by the amount by which the cost of qualified section 179 property placed in service during the tax year exceeds $800,000. For qualified section 179 Gulf Opportunity (Go) Zone property, the maximum section 179 deduction is higher than the deduction for most other section 179 property.  You may also see the IRS site for Code Section 179 for the expanded definition.