He Shed

Technical topics regarding tax preparation.
#1
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Consulting with a prospective tax client looking to open a woodworking business. He would build a detached structure in the back of his rural property to house the business. It's detached so it doesn't fit the office in home rules... is the complete cost of building it something that can be depreciated if it is used 100% for business?
If not, what tax saving strategies would you recommend associated with building such a structure?
 

#2
Coddington  
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Section 280(c)(1)(C).
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 

#3
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Thank you for your reference, which I suspect is more precisely 280A (c)(1)(C). I honestly have trouble decoding what seems to be the rule --which looks to be 280A(c)(1): (it's not deductible) -- and what is the exception to the rule -- which looks to be 280A(c)(1)(C): (it IS deductible). So ... in the case of a separate structure.... it's deductible. Am I correct?
If I'm reading the code section incorrectly, and it's not deductible, then does a tax pro on the board have strategies he or she might use in this situation, albeit tax credits, deductions or legal loopholes other than the above referenced cite?
 

#4
Doug M  
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So ... in the case of a separate structure.... it's deductible. Am I correct?


Yes
 

#5
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Is the detached structure - the shed out back - going to be a dwelling unit that is used by the taxpayer during the taxable year as a residence? If not, I believe Section 280A - see Section 280A(a), in particular - doesn't apply, and therefore doesn't disallow the deduction of expense items related to the shed's business use.

What that does allow to be deducted, however, is another question. Pretty soon you're going to be asking questions about separately metered utilities, the allocation of real estate taxes, and all sorts of interesting things like that.
 

#6
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So what about separately metered utilities, and real estate taxes, and.... ah, just kidding, never mind. :)
Thanks to all for helping me better understand this code issue.
 


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