Question

You use a computer in your self-employed (Schedule C) business. The computer is 3 years old, and you decide to upgrade the graphics card at a cost of $550. In your line of business, this is considered necessary and ordinary. The cost is reasonable. On your taxes, you included a business deduction of $550. Is this tax treatment correct? Yes, taking a $550 deduction is correct. No, taking a $550 deduction is incorrect

Answer 1

Solution: The Answer is Yes, taking a $550 deduction is correct.

Explanation:

1) As per Schedule C, which break down our income and expense for self employed business will allow office expenses as deduction.

2) Office Expenses means expenses for operating office, In this question, computer is used for self employed business and in this line of business, this kind of graphics upgrade expenses are necessary and ordinary.

3) At the same time, here cost is reasonable.

4) So, it is eligible of deduction under Schedule C.

Remaining option is Incorrect.