I just bought a 192 sq. ft. storage shed for my backyard. A little over half of it is used for storing daycare toys, the rest for our yard equipment. Do I include this in my time/space percentage, or do I depreciate the shed? The cost was $3400 total, if that helps.

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Normally, you would depreciate the cost of the shed over 7 years. However, if you use it more than 50% for your business, you can use the Section 179 rule and deduct the business portion of the shed in one year. So, this might be the case for you. I would measure the space taken up by the toys to be sure it's more than 50% of the space. Also, the yard equipment is also used for your business, so even if the toys take up, say 45% of the space, you could still probably say the overall use of the shed is more than 50% business.

Don't count the space of the shed in your time-space %. Here's an article I wrote on this: "Should I Count My Shed in My Time-Space %?"

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Thank you for the advice!

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