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Daycare and Taxes>Tom Copeland...Question On Deductions
frugalmama4 06:13 AM 11-12-2013
Hello Tom,

I’m getting myself organize for the upcoming tax season; and want to make sure I have everything in order.

Questions:
We converted our attached two car garage into the 100% daycare space; how do I go about filing/recording the following expenses?
1.) Had to put a separate door in (Per-Licensing guide lines) door opens to the outside from the garage…not into the house.
 Labor cost $375.00
 Material cost $ 120.00 (door) $80.00 (other)
1a.) How due I deprecation this expense?
1b.) Can I deducted the entire cost of material as supplies at once??

2.) Had to put in a fence to cover the new door (Home Owners Association request)
 Labor cost $500.00
 Material cost $ 600.00
2a.) Due I deprecation the entire cost ($1,100) over 15years or the Time Space Portion over 15 years?
2b.) Can I deducted the entire cost of material as supplies at once??

3.) Put in a kitchenette (upper & lower cabinets)
3a.) Can I deducted the cost of cabinets as supplies $109.00 & $62.00; counter top $60.00

4.) Shed purchased to store family & daycare items, how deprecation this 7yr/15yr?

5.) We put in a mini split a/c unit (It’s only able to cool/heat the daycare space “garage” it is attached to the house but only useable in the daycare space.) I’m financing this unit; do I deprecation the unit as I would a free standing a/c unit and also write off the loan interest?? *Note this is an interest free loan if paid within 12months…so would I be able to write off the entire cost once paid in full “before interest is added on” this will be paid off in 2014.

Other work done:
*Floors painted (Material cost $ 107.00)
*2-Celling fans (material cost $70.00 each)

Questions:
Do I need to give the contractor who did the work a 1099 and seen a copy to the IRS??? I do have receipts for everything paid to him.
Reply
TomCopeland 07:46 AM 11-12-2013
Originally Posted by frugalmama4:
Hello Tom,

I’m getting myself organize for the upcoming tax season; and want to make sure I have everything in order.

Questions:
We converted our attached two car garage into the 100% daycare space; how do I go about filing/recording the following expenses?
1.) Had to put a separate door in (Per-Licensing guide lines) door opens to the outside from the garage…not into the house.
 Labor cost $375.00
 Material cost $ 120.00 (door) $80.00 (other)
1a.) How due I deprecation this expense?
1b.) Can I deducted the entire cost of material as supplies at once??

2.) Had to put in a fence to cover the new door (Home Owners Association request)
 Labor cost $500.00
 Material cost $ 600.00
2a.) Due I deprecation the entire cost ($1,100) over 15years or the Time Space Portion over 15 years?
2b.) Can I deducted the entire cost of material as supplies at once??

3.) Put in a kitchenette (upper & lower cabinets)
3a.) Can I deducted the cost of cabinets as supplies $109.00 & $62.00; counter top $60.00

4.) Shed purchased to store family & daycare items, how deprecation this 7yr/15yr?

5.) We put in a mini split a/c unit (It’s only able to cool/heat the daycare space “garage” it is attached to the house but only useable in the daycare space.) I’m financing this unit; do I deprecation the unit as I would a free standing a/c unit and also write off the loan interest?? *Note this is an interest free loan if paid within 12months…so would I be able to write off the entire cost once paid in full “before interest is added on” this will be paid off in 2014.

Other work done:
*Floors painted (Material cost $ 107.00)
*2-Celling fans (material cost $70.00 each)

Questions:
Do I need to give the contractor who did the work a 1099 and seen a copy to the IRS??? I do have receipts for everything paid to him.
1) Depreciate 100% of the all costs associated with the door over 39 years (home improvement.
2) Depreciate 100% of all costs associated with the fence over 15 years. Use the 50% bonus depreciation rule to deduct $550 in 2013 and depreciate the other $550 over 15 years.
3) Deduct the time-space % of the cost in one year.
4) Depreciate the time/space % of the shed over 7 years. Use the 50% bonus depreciation rule.
5) Depreciate 100% of the ac unit over 39 years. Note: if the ac is detachable and you would take it with you if you moved, use the Section 179 rule and deduct it all in 2013.
Deduct 100% of the other work in 2013.
Reply
frugalmama4 08:13 AM 11-12-2013
Originally Posted by TomCopeland:
1) Depreciate 100% of the all costs associated with the door over 39 years (home improvement.
2) Depreciate 100% of all costs associated with the fence over 15 years. Use the 50% bonus depreciation rule to deduct $550 in 2013 and depreciate the other $550 over 15 years.
3) Deduct the time-space % of the cost in one year.
4) Depreciate the time/space % of the shed over 7 years. Use the 50% bonus depreciation rule.
5) Depreciate 100% of the ac unit over 39 years. Note: if the ac is detachable and you would take it with you if you moved, use the Section 179 rule and deduct it all in 2013.
Deduct 100% of the other work in 2013.
Thanks Tom,

Just to clarify for myself:

1.) The kitchenette was put into the 100% daycare space "garage"
So would that be consider a 100% business...right??

2.) am' I required to give the contractor a 1099??

3.) The a/c unit is begin finance "I didn't pay it off yet" I can still deducted the full cost this year?? ($4100), *its detachable!

4.) Oh, one more I didn't mention. Had a false wall built over the mental garage doors (its removable should we ever move); how do I deduct this ($950).
Thanks!
Reply
TomCopeland 08:33 AM 11-13-2013
Originally Posted by frugalmama4:
Thanks Tom,

Just to clarify for myself:

1.) The kitchenette was put into the 100% daycare space "garage"
So would that be consider a 100% business...right??

2.) am' I required to give the contractor a 1099??

3.) The a/c unit is begin finance "I didn't pay it off yet" I can still deducted the full cost this year?? ($4100), *its detachable!

4.) Oh, one more I didn't mention. Had a false wall built over the mental garage doors (its removable should we ever move); how do I deduct this ($950).
Thanks!
Yes, the kitchenette is 100% business. You aren't required to give a contractor a 1099 unless he/she is an individual working for himself and not part of a company. Since the ac unit is detachable, deduct $4,100 on Form 4562 Part I under the Section 179 rule. Deduct 100% of the cost of the metal garage doors in the same way.
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