Listed Property

Listed Property

The term listed property refers to a certain type of depreciable property that may be used primarily for business purposes. This test stipulates that the business usage of the listed property must be more than 50%. This must be done for every asset a business claims as listed property in order to: Claim a bonus depreciation Claim an expensing election To depreciate the property under the modified accelerated cost recovery system (MACRS) depreciation system A recaptured depreciation may be added back to income in any year after the first year of use that the listed property business usage drops below 50%. Listed property that does not meet the predominant use test is not eligible for Section 179 depreciation — the maximum amount of depreciation allowed — or other accelerated depreciation methods. Costs associated with the use of listed property are not deductible as business expenses. Listed property — also referred to at times as mixed-use property — used primarily for business reasons is subject to the statutory percentage depreciation method, as it will be considered a business asset. According to the Internal Revenue Service (IRS), listed property includes: Automobiles weighing less than 6,000 pounds, excluding ambulances, hearses, and trucks or vans qualified nonpersonal use vehicles. Other property used for transportation purposes including trucks, buses, boats, airplanes, motorcycles, and other vehicles used to transport persons or goods. Properties used for entertainment, recreation or amusement.

Listed property is any depreciable asset subject to a special set of tax rules if it is used predominantly for business purposes.

What Is a Listed Property?

The term listed property refers to a certain type of depreciable property that may be used primarily for business purposes. To be considered listed property, an item must be used for more than 50% for a company's business. That means assets may be used for personal purposes for the remainder of the time. Listed property is subject to a special set of tax rules for the taxpayer.

Listed property is any depreciable asset subject to a special set of tax rules if it is used predominantly for business purposes.
In order to be considered listed property, an asset must be used for business purposes no less than 50% of the time.
Listed property may also be used for personal use for the remainder of the time.
Examples of listed property include vehicles, computers, and recording equipment.

Understanding Listed Property

Listed property is any asset that a company uses for business purposes for more than 50% of the time. These assets also depreciate in value over time and can be used for personal purposes when not in use for the day-to-day operations of the business. In simple terms, a company's listed property is any asset used for both business and personal purposes that loses value over time, as long as it is predominantly used to run the business.

According to the Internal Revenue Service (IRS), listed property includes:

The listed property rules were introduced as part of the United States tax code to keep people from claiming tax deductions for the personal use of property under the guise that it was used in a business or trade. For instance, companies are required to keep detailed records of all the assets they use as listed property. This includes the amount paid for each piece of property including the original cost, any repairs involved, insurance, and any other related expenses.

Listed property — also referred to at times as mixed-use property — used primarily for business reasons is subject to the statutory percentage depreciation method, as it will be considered a business asset. Listed property used for business only half the time at most — and passes the predominant use test — can still have depreciation based on the business use percentage claimed on it. In this case, though, it must be depreciated under the straight-line method. Cars used solely to carry passengers are also subject to additional depreciation limitations. Listed property that does not meet the predominant use test is not eligible for Section 179 depreciation — the maximum amount of depreciation allowed — or other accelerated depreciation methods.

Special Considerations

Costs associated with the use of listed property are not deductible as business expenses. In other words, a tax-paying entity must substantiate the business use of a property if it is to depreciate this property or deduct expenses. The predominant use test must be applied to every item of listed property. This test stipulates that the business usage of the listed property must be more than 50%. This must be done for every asset a business claims as listed property in order to:

A recaptured depreciation may be added back to income in any year after the first year of use that the listed property business usage drops below 50%. That is, the taxpayer may have to pay back some of the excess depreciation claimed. The amount of depreciation recaptured is the accelerated depreciation allowed for the years preceding the recapture year, including any Section 179 expense, minus the MACRS alternative depreciation system (ADS) depreciation amount that would have been allowed for the same period of time.

Examples of Listed Property

Here's a list of assets that generally qualify as listed property:

As of Jan. 1, 2010, cell phones cannot be claimed as listed property under the U.S. tax code.

Cell phones were once included as a category of listed property. But changes were made to prevent taxpayers from abusing the system and to cut down on people claiming their personal communications devices as commercial-use equipment. As such, the Small Business Jobs Act removed cell phones and other similar personal telecommunications devices from the list of acceptable listed property as of Jan. 1, 2010. Cell phones and other devices, however, may still be claimed for tax years prior to 2010.

Related terms:

Alternative Depreciation System (ADS)

Alternative Depreciation System is a depreciation schedule with a straight-line recovery period that generally better reflects the asset's income. read more

Asset

An asset is a resource with economic value that an individual or corporation owns or controls with the expectation that it will provide a future benefit. read more

Bonus Depreciation

Bonus depreciation is a tax break that allows businesses to immediately deduct a large percentage, currently 100%, of the purchase price of eligible assets. read more

Business Expenses

Business expenses are costs incurred in the ordinary course of business. Business expenses are deductible and are always netted against business income. read more

What Is Depreciable Property?

Depreciable property is an asset that is eligible for depreciation treatment in accordance with IRS rules. read more

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value over time. read more

Depreciation Recapture

Depreciation recapture is the gain realized by the sale of depreciable capital property that must be reported as ordinary income for tax purposes. read more

Form 4562: Depreciation and Amortization

Form 4562: Depreciation and Amortization is an Internal Revenue Service (IRS) tax form used to depreciate or amortize property purchased for use in a business. read more

Form 4797: Sales of Business Property

Form 4797 is used to report gains made from the sale or exchange of business property, including but not limited to property used to generate rental income. read more

Income

Income is money received in return for working, providing a product or service, or investing capital. A pension or a gift is also income. read more