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Daycare and Taxes>2013 Depreciation Rules
zorrambo 02:32 PM 03-29-2014
As far as I can tell from the IRS website there is only one way to depreciate furniture purchased in 2013: the 7 year straight line. It appears there are no special rules that apply unless I am missing something. I think I apply the half-year convention.

Two mattresses purchased in July 2013 at $1567. Business started Aug. 1, 2013. My business basis is $125. 14.2%(Table %) is $18.

Does this look right? Am I missing any special rules?

Thank you
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TomCopeland 04:26 PM 03-29-2014
Originally Posted by zorrambo:
As far as I can tell from the IRS website there is only one way to depreciate furniture purchased in 2013: the 7 year straight line. It appears there are no special rules that apply unless I am missing something. I think I apply the half-year convention.

Two mattresses purchased in July 2013 at $1567. Business started Aug. 1, 2013. My business basis is $125. 14.2%(Table %) is $18.

Does this look right? Am I missing any special rules?

Thank you
You can use the MACRS rules that allow you to accelerate your depreciation. Also if you bought it new in 2013 you can use the 50% bonus depreciation rule. Use the half year convention.
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zorrambo 09:32 PM 03-29-2014
Originally Posted by TomCopeland:
You can use the MACRS rules that allow you to accelerate your depreciation. Also if you bought it new in 2013 you can use the 50% bonus depreciation rule. Use the half year convention.
Is it possible that I can use the 50% Bonus Depreciation rule if my TS% is less than 50%?

If so, here is my thought process based on what you suggested...

On July 28, 2013, I bought two mattresses for $1,567. The basis for depreciation is $125. The bonus depreciation is $62.50 (50% X $125). That leaves a basis for depreciation of $62.50 ($125 - $62.50). Assuming the mattress is 7-year property and using the half-year convention, the first-year depreciation is $8.93 (14.29% X $62.50). Thus, the total regular and bonus depreciation deduction for the first year is $71.43 ($62.50 + $8.93). The depreciation basis for future years is $62.50. Thus, for 2014 the depreciation is 24.49% X $62.50 or $15.31.

Thank you.
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TomCopeland 08:08 AM 03-30-2014
Originally Posted by zorrambo:
Is it possible that I can use the 50% Bonus Depreciation rule if my TS% is less than 50%?

If so, here is my thought process based on what you suggested...

On July 28, 2013, I bought two mattresses for $1,567. The basis for depreciation is $125. The bonus depreciation is $62.50 (50% X $125). That leaves a basis for depreciation of $62.50 ($125 - $62.50). Assuming the mattress is 7-year property and using the half-year convention, the first-year depreciation is $8.93 (14.29% X $62.50). Thus, the total regular and bonus depreciation deduction for the first year is $71.43 ($62.50 + $8.93). The depreciation basis for future years is $62.50. Thus, for 2014 the depreciation is 24.49% X $62.50 or $15.31.

Thank you.
You are correct, assuming your time-space % is 8% (which is extremely low). Yes, you can use the 50% bonus rule even if your time-space % is below 50%.
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zorrambo 08:39 AM 03-30-2014
Yes, my TS% is 8%. Thank you again for your help.
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TomCopeland 07:48 AM 03-31-2014
Originally Posted by zorrambo:
Yes, my TS% is 8%. Thank you again for your help.
I can't help but ask why is your time-space % so low. Did you start child care in the middle of the year? If so, your total number of hours in the year are those hours from the day you started caring for children until the end of the year.

Did you include your basement and garage in the space used regularly for your business? Most providers use these spaces regularly.
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zorrambo 01:22 PM 03-31-2014
I cared for one child starting in August, afternoons only. Total hours were 202 plus 82 when child not present for cleaning, etc. Aug. 1 to Dec. 31 comes to 3672 hours. That is 8% for the time percentage. I used my entire home regularly.
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TomCopeland 07:43 AM 04-01-2014
Originally Posted by zorrambo:
I cared for one child starting in August, afternoons only. Total hours were 202 plus 82 when child not present for cleaning, etc. Aug. 1 to Dec. 31 comes to 3672 hours. That is 8% for the time percentage. I used my entire home regularly.
You are correct!
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Tags:2013 changes, depreciation, half-year convention
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