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5 years ago when I entered medical school the school required the purchase of a particular home computer to the tune of $3100. a little more than a year ago I entered residency (paid job in medicine)and continued to use the computer for medical software use ect. I'm wondering if on selling the computer for 100 bucks you could count the remaining 3000 dollars as a capital loss on form 4797 since it was a required purchase for my "trade" (page 17 of IRS publication 544. I imagine this situation also applies to other folks out there (substitute medical school for the graduate or vocational program of your choice) thanks in advance for your advice.

My gut says this won't fly. You can't be in the trade or business of being a doctor until you've completed medical school. So the computer couldn't be placed in service as a potential business asset until the beginning of your residency at the earliest. At that point, you could convert it from personal use (medical schooling) to business use (the practice of medicine). It's business basis at that point would be the lower of it's cost (the $3100) or its FMV (based on what I know about computers, it probably a whole lot less than $3100). You would then depreciate the computer (or elect to expense it under section 179). The remaining tax basis after depreciation/sec. 179 expense could then be used to calculate a potential loss on form 4797.

Probably not the answer you wanted.

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