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I use the family computer to track my investments. Does this entitle me to deduct part of its cost? When Iím not using it, the rest of the family plays games on it, writes letters, that sort of thing. - Harold from Florida.

The good news is that the use of a computer to produce investment income is deductible; but the bad news is that in practice the deduction will probably be of little value to you. Simply because this deduction scenario has a lot of limitations.

1. You have to have a written record of the investment related use of the computer versus the personal use of the machine to claim a deduction, including one for depreciation.
2. In order to take any deduction, you must itemize them on your return. The IRS reports that only about 30% of all taxpayers itemize their deductions.
3. This deduction would be considered to be a ìmiscellaneousî deduction on Schedule A. Therefore, it is deductible only to the extent the amount claimed exceeds 2% of your adjusted gross income.

So, yes it is deductible . . . in theory, but in practical terms, it is unlikely to generate enough benefit even to justify the time youíd expend in keeping track of your actual use of the computer.

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