I am sure that all of our farm readers realized that a log of all of their cell phone usage up to December 31, 2009. This log was required to deduct the cost of the cell phone service and any personal use would either not be deductible or would have been included as part of compensation to the employee.
However, the Small Business Jobs Act of 2010 removed cell phones from the definition of listed property (listed property items require a log of use, etc.). This new law is effective January 1, 2010 and the IRS just issued Notice 2011-72 clarifying how these changes apply to taxpayers. In brief, as long as the cell phone is necessary for the employee to perform their work for the employer, then the cell phone cost is deductible by the employer and is non-taxable to the employee. This applies whether the employer pays for the cell phone service directly or reimburses the employee.
I would hazard a guess that almost no farmers or other users of cell phones ever performed the logging of cell phone use in any substantial manner, so this new rule is very welcome.
If you want to get even more detail on this matter, here is a memo that the IRS has issued that provides guidance to their agents in reviewing cash allowances and reimbursements for work-related use of personally-owned cell phones.
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