Pouring Concrete Walkway for Daycare Entrance

[Abigail]

We have gotten quotes to pour a concrete walkway for the daycare parents to use to enter through the side door. They have always come through the side door, but we've been killing the grass over the winter and now it's time to pour a walkway. It's going to cost $1,500 and the only reason we're doing it is so the grass doesn't continue to die. We're pouring it from the driveway to the side door. Please tell me what kind of expense this is and how to handle it. Thank you!

[Michael]

I was thinking landscaping but I am leaning towards safety. Should be interesting to see what Tom thinks.

[TomCopeland]

concrete walkway

We have gotten quotes to pour a concrete walkway for the daycare parents to use to enter through the side door. They have always come through the side door, but we've been killing the grass over the winter and now it's time to pour a walkway. It's going to cost $1,500 and the only reason we're doing it is so the grass doesn't continue to die. We're pouring it from the driveway to the side door. Please tell me what kind of expense this is and how to handle it. Thank you!

This is a land improvement (since it's an item that is attached to the land and increases the value of the land). If the walkway is only used by your business, it's 100% business. It sounds like it may be used 90% or so for business, in which case, claim 90% or so of the cost. Depreciate it over 15 years.

In 2012 there is a 50% bonus depreciation rule that allows you to deduct 50% of this cost in 2012 and depreciate the rest over 15 years.

Congress may change the 50% rule later this year to a 100% rule. So, we won't know exactly how to depreciate this until later in the year.

[Abigail]

I also have to take out all the rocks and plants to prep the area for the company to pour the concrete at a lower price. Do I count these hours as daycare hours worked outside of children being present? I'm guessing it'll take me about 4 hours to accomplish this.

[TomCopeland]

Hours worked

I also have to take out all the rocks and plants to prep the area for the company to pour the concrete at a lower price. Do I count these hours as daycare hours worked outside of children being present? I'm guessing it'll take me about 4 hours to accomplish this.

I'd count most, but not all of the hours, because you will be getting some personal use of the walkway.

[MN Day Mom]

Can section 179 be used?

Another similar question Tom...

I am pouring a concrete slab on my playground. 100% daycare use as my children do not play on the playground and the door to access the playground and the slab comes directly out of my daycare space, so we never have reason to touch it unless it is for daycare purposes.

That said. Can the slab be depreciated using section 179?

[TomCopeland]

concrete slab

Another similar question Tom...

I am pouring a concrete slab on my playground. 100% daycare use as my children do not play on the playground and the door to access the playground and the slab comes directly out of my daycare space, so we never have reason to touch it unless it is for daycare purposes.

That said. Can the slab be depreciated using section 179?

You can't use Section 179 in your situation because a concrete slab is considered a land improvement, and land improvements are not eligible for the 179 rule. Under the 2012 law land improvements are eligible for the 50% bonus depreciation rule that allows you to claim half the cost in 2012 and depreciate the other half over 15 years.

[Abigail]

You said in May congress may change this 50% depreciation rule to 100% for this year, do you know if and when that would be announced?

[TomCopeland]

land improvements

Congress has adjourned for the year and hasn't announced any changes in the 50% rule for 2012, so it remains 50% for 2012. They may change the rule for 2013 later. We don't know what they will do.