Qualified Business Use
To determine if you can depreciate property, you must determine the percentage of qualified business use for each property. Generally, a qualified business use is any use in your trade or business. However, it does not include any of the following:
Leasing the property to a 5% owner or related person
The use of the property as compensation for services performed by a 5% owner or related person
The use of the property as compensation for services performed by any person (who is not a 5% owner or related person), unless an amount is included in that person's income for the use of the property and, if required, income tax was withheld on that amount.
Excluding these uses above from the numerator, determine your percentage of qualified business use. Your percentage of qualified business use may be smaller than the business/investment use percentage.
For automobiles and other vehicles, determine the percentage by dividing the number of miles the vehicle is driven for trade or business purposes or for production of income during the year (not to include any commuting mileage) by the total number of miles the vehicle is driven for all purposes. Treat vehicles used by employees as being 100% for business/investment purposes if the value of personal use is included in the employees' gross income, or the employees reimburse the employer for personal use. Employers who report the amount of personal use of the vehicle in the employee's gross income, and withhold the appropriate taxes, should enter "100%" for the percentage of business/investment use.
For other listed property (such as computers or video equipment), allocate the use based on the most appropriate unit of time the property is actually being used (rather than merely being available for use). If during the tax year you convert property used solely for personal purposes to business/investment use (or vice versa), figure the percentage of business/investment use only for the number of months you use the property in your business or for the production of income. Multiply that percentage by the number of months you use the property in your business or for the production of income, and divide the results by 12.
For more information see http://www.irs.gov/pub/irs-pdf/i4562.pdf