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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

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Old 09-30-2012, 08:06 AM
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Default Explain Start Up Cost Please

Tom, can you please explain start up cost? Is it that I can claim up to $5k of purchases BEFORE the start of my business? What about if it was in the previous year? And would I claim the full amount or T/S%?

For example, I bought a crib, changing table, pack n play, sheets, rocker, rocking chair, guest bed, decorations, etc. All the things to make the nursery for MY child when I was pregnant the year before I started my daycare. Then when he was born I was open for business and a couple months later I got my first DCKs. So what can I claim of the entire nursery inventory that now is ALL used both by my DS and DCKs?
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Old 09-30-2012, 01:12 PM
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Some threads on start up costs: https://www.daycare.com/forum/tags.p...=start+up+cost
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Old 10-01-2012, 07:45 AM
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Default Start up costs

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Originally Posted by glenechogirl View Post
Tom, can you please explain start up cost? Is it that I can claim up to $5k of purchases BEFORE the start of my business? What about if it was in the previous year? And would I claim the full amount or T/S%?

For example, I bought a crib, changing table, pack n play, sheets, rocker, rocking chair, guest bed, decorations, etc. All the things to make the nursery for MY child when I was pregnant the year before I started my daycare. Then when he was born I was open for business and a couple months later I got my first DCKs. So what can I claim of the entire nursery inventory that now is ALL used both by my DS and DCKs?
You can deduct up to $5,000 of items purchased before your business began (no limit on how many years earlier this can be). These are items that would normally not be depreciated (cost less than $100). If the item is used only by your business, deduct 100% of the cost. If the item is also used by your family, deduct the time-space %. In your case, since you used these items for personal purposes before your business began, you can't use the start up rule. Instead, estimate the fair market value of these items as of the month your business began, multiply them by your time-space % and depreciate them over 7 years.
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