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Daycare and Taxes>Depreciating Items Purchased Prior To Starting Business
tn0087 05:38 PM 02-09-2011
Hi Tom,

I have purchased your Record-Keeping Guide which has played an absolutely essential role in completing my taxes. I am currently using Turbo Tax (though probably will not next year as I like the results of my spreadsheets better).

My question is how do I depreciate the items purchased prior to starting my business per room. In the depreciation section, you outline how to list each room's assets and their current fair market value to depreciate them. Do you then need to insert each item into a separate line as a depreciable item? Or can you simply state that the depreciable is the 'Living Room'? In Turbo Tax, I don't see how this can be done as the only applicable category would be 'Other'; however, it also asks for the original date of purchase which varies for each item.

Will inserting each item, or conversely, inserting an item like 'Living Room' cause undue speculation on my return?

Thanks!
Tim
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TomCopeland 08:35 PM 02-09-2011
Yes, you are entitled to depreciate all items owned before your went into business and then later used in your business. You don't need receipts - take pictures and estimate their fair market value at the time you started using them in your business.

Putting this into Turbo Tax is a mess. I'd lump your items together, rather than trying to list each item separately. You could lump them together by room. Call them Living Room-Other, Dining Room-Other. Don't worry about entering in the original date of purchase - it won't make a difference in the depreciation deduction. How you list them in Turbo Tax won't cause undue attention to your tax return.



Join me February 28 for a webinar "How to Reduce Your Taxes for 2010 and 2011". For details: https://www.daycare.com/news/taxes/t...d-webinar.html
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tn0087 12:11 PM 02-13-2011
I am not sure how you manage to keep up with all of the requests on this site, Tom, but I am thrilled that you do. That was exactly the information I needed!

Thanks again!
Tim
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TomCopeland 12:50 PM 02-13-2011
I am not nearly as busy as a typical family child care provider....
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Tags:depreciation, turbo tax
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