Let's assume you own a laptop computer that you decide to use in your business. You purchased the laptop for $4,500, and have determined that its fair market value on the date you convert it to business use is $2,500. You primarily use the computer for business purposes, but continue to use it to monitor your household finances and your personal email, and for entertainment purposes. In percentage terms, you figure your usage is split 70 percent business and 30 percent personal.
Your depreciation deductions for the computer will be computed on the basis of the $2,500 amount. Assume that based on this amount, you would be entitled to a deduction of $450 if you used the computer solely for business purposes. Because your business use represents only 80 percent of the total usage, you would only be entitled to a $315 deduction ($450 x 70%).