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Daycare and Taxes>Depreciation vs Expense Which Is Which?
legomom922 08:23 AM 02-20-2011
I guess I'm confused as to what you depreciate and claim as a expense. I think I read it somewhere on MMK that (this is a example) that a baby swing is a expense, but a changing table you would depreciate. So now I'm wondering how do you determine the difference between what should be claim as a expense and what is depreciated over time. why can I claim a swing as a expense, but a highchair I can't. KWIM? Is there a rule of thumb to follow in figuring this out? Like certain questions you ask to figure it out?

Question No.2

I'm also confused on land improvements vs a expense. We bought a truck load of dirt to level an area of our yard to put in the pool, so is the dirt a expense? or is it considered land improvement? And would the pool be considered a expense or also land/home improvement?
TomCopeland 10:58 AM 02-20-2011
As a general rule you can deduct items in one year that cost less than $100 and you must depreciate items that cost more than $100.

There are exceptions to this general rule:
1) A repair or maintenance can be deducted in one year (painting the outside of your home costing $2,000)
2) Office equipment, furniture, appliances, play equipment can be deducted in one year if you bought the item in the year you are deducting it and it was used more than 50% of the time in your business. This is called the Section 179 rule and is found on Form 4562 Depreciation, Part I. Although this is a great rule, watch out. If you use it 50% or less of the time in your business over the coming 5 years (for office equipment) or 7 years (for furniture, appliances, ad play equipment) you will have to pay back some of the deductions you claimed.

I would deduct the dirt and the pool as a land improvement, depreciated over 15 years. Land improvements can use the new 50% additional depreciation allowance. For more info:

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Tags:depreciation, depreciation vs expense, expenses, tom copeland
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