Can I use a purchase I plan to make in January 2007 as a 2006 tax deduction for my business?

September 5, 2006 7:23 PM

I am a Mac user, and I want to get a MacBook to replace my Powerbook for my web design business. But, I don't want to buy one until the next update comes out. More details to follow.

Rumors are flying that Apple will update the MacBook line in September. (There are special events rumored for 9/12 and 9/25. 9/12 has been confirmed.) If that happens, I will buy one before the end of the year and my question won't be an issue.

If they don't update them in September, I suspect they won't update them until MWSF in January. If that happens, can I use the purchase I plan to make as a deduction for tax year 2006?

posted by jxpx777 to Law & Government (16 answers total)

jxpx-there is NO chance of not updating the notebooks. Everyone else is already selling Core 2 Duos; Apple will look like shit if they don't hop on it.
posted by evariste at 7:45 PM on September 5, 2006

IANAA (to say the least!)

AFAIK, if you are using the accrual method of accounting then you'd book the expense when you are invoiced for it and if you use the cash method you'd book the expense when you pay for it. So you'd need to have one or both of those events occur in 2006.

Now I'm not in the US so I don't know for sure, but I'd be surprised if you could use the entire value of the computer as a deduction in one tax year, rather than amortizing it over the expected life of the computer. (e.g. Here in Canada, you'd usually have to spread it over 5 years for computer equipment valued over $200)
posted by winston at 8:01 PM on September 5, 2006

I would imagine the the MacBook Pro will be updated with Core 2 Duo soon [maybe next week in Paris] and the MacBook will not go to Core 2 Duo until next year.
posted by birdherder at 8:09 PM on September 5, 2006

Best answer: Now I'm not in the US so I don't know for sure, but I'd be surprised if you could use the entire value of the computer as a deduction in one tax year, rather than amortizing it over the expected life of the computer.

In fact, you can write it all off the first year in the US. It's called a Section 179 deduction. The limit is currently $108,000 a year. More here.
posted by kindall at 8:23 PM on September 5, 2006

there is NO chance of not updating the notebooks.

Right now the macbook and macbook pro aren't really very different in terms of processing power (especially given the price difference) -- there has been a lot of speculation that the macbook updates will lag (starting with the core 2 duo) to make them more distinctly consumer-level.
posted by advil at 8:39 PM on September 5, 2006

advil-that doesn't make a lot of sense to me. Will the MacBooks' competition, at the MacBooks' price point, give Apple an easy time of differentiating their products? Apple's greater competition is other laptop vendors, not Apple's own laptops. The screen size and graphics are differentiation enough between the Pro and consumer-level notebooks, IMO.
posted by evariste at 9:03 PM on September 5, 2006

Price is differentiation enough, for that matter.
posted by five fresh fish at 9:13 PM on September 5, 2006

there is NO chance of not updating the notebooks.

You very much might be right, but no one I've read, insiders or not, have your confidence.
posted by gtr at 9:28 PM on September 5, 2006

Apple's greater competition is other laptop vendors, not Apple's own laptops.

Not really. Apple is the sole vendor of Macintosh portables.
posted by kindall at 9:37 PM on September 5, 2006

I agree with birdherder. Apple doesn't like rapid product cycles, and a jump to Core 2 Duo three months after the introduction of the MacBooks would be too much too soon. Look for Core 2 Duos in Pro models before the end of the year, but not in the MacBooks until Intel releases some higher-speed Core 2 Duo chips and Apple can put those in the Pros and start trickling the current generation down to the consumer models.

As for the actual question asked by the poster, kindall's right on.
posted by jjg at 9:54 PM on September 5, 2006

The big announcement coming up is a new generation of iPod, that's what I hear.
posted by AmbroseChapel at 3:07 AM on September 6, 2006

Response by poster: Thanks for all the opinions about what will happen, but my main question is if I have to buy the machine before the first of the year in order to count it for tax year 2006 deductions, as a section 179 deduction as Kindall said.
posted by jxpx777 at 7:54 AM on September 6, 2006

my main question is if I have to buy the machine before the first of the year in order to count it for tax year 2006 deductions

Yes, according to the law, you do. It's not like an IRA where you can do it up to April 15 of the following year.

Perhaps you could buy, say, an Amazon or CompUSA gift certificate/card this year, expense that, and buy the computer next year. This may or may not be kosher, so I suggest running it by an accountant.
posted by kindall at 8:29 AM on September 6, 2006

By the way, Apple announced today that the iMac line is now all Core 2 (and also rolled out a new 24" model). So perhaps the MacBook line will be refreshed sooner than anyone thinks.
posted by kindall at 8:51 AM on September 6, 2006

(And Apple didn't use one of their special events to announce the iMac upgrade, either.)
posted by kindall at 8:52 AM on September 6, 2006

I'm in the same boat- ready to pick up a macbook pro, but I don't want to wake up the next day and see that they just came out with the upgrade. I guess there's nothing to do but wait for a bit.
posted by jay.jansheski at 2:06 PM on September 6, 2006 [1 favorite]