USE OF CELL PHONES FOR BUSINESS

The following is a summary of important tax developments concerning the use of cell phones for business use. Please call us for more information at (562) 912-4334.

Regardless if the phone is owned by you or your company, business uses is deductable. However because cell phones are indentified as “listed property”, there are strict substantiation requirements. Listed property is any property that lends itself to both business and personal use like computers, cars and cell phones. A Cell Phone Log should be used to substantiate the business use. The use of this log is required to take a business deduction. Therefore, providing you used this log, the company can reimburse you for the business use. It is important to note that if the company owns the phone, then any personal usage of an employer-provided cell phone is a taxable fringe benefit.

To get around the substantiation requirements, you should have two phones, one deducted to business and the other dedicated for personal.

As of the date of this e-mail, the IRS Commissioner and the Treasury Secretary have called on Congress to simplify the rules for cell phone substantiation and asked that no tax consequences will occur to employers or employees for personal use of cell phones provided by employers. Additionally, legislation has been introduced to eliminate cell phones from the listed property definition. Practitioners should monitor this issue for further developments.

Please call us at (562) 912-433 if you have any questions..