Closing My Business

[Unregistered]

I am planning on closing my fcc business by the end of the summer after nearly 22 years! I am wondering how this will figure in with my depreciation of things? house? Home improvements/ furnishings I have been claiming dep in throughout the years?

What about if we would ever down size and want to sell our home?

Just wanted to be sure I have things in order.

Thanks for the help,
Regina

[TomCopeland]

Closing your business

I am planning on closing my fcc business by the end of the summer after nearly 22 years! I am wondering how this will figure in with my depreciation of things? house? Home improvements/ furnishings I have been claiming dep in throughout the years?

What about if we would ever down size and want to sell our home?

Just wanted to be sure I have things in order.

Thanks for the help,
Regina

If you close your business before the end of the year, you won't be able to claim a full year's worth of depreciation in 2013. For the home and home improvements you will claim depreciation based on the number of months you were in business in 2013. For all other depreciation you will claim a half year's worth of normal depreciation, regardless of what month you closed.

If you used the Section 179 rule in previous years, you will have to report as income some of the previous depreciation you claimed.

You won't be able to claim any depreciation after 2013, because you will no longer be in business. In other words, if you started depreciating a swing set in 2010, you will only be claiming depreciation for 3 years and will not be able to claim the other 4 years of depreciation.

When you sell your home you will owe taxes on the depreciation you claimed (or were entitled to claim) while you used your home for your business.

I've written a chapter about closing your business in my 2012 Family Child Care Tax Workbook and Organizer.

[Unregistered]

Can you tell me any down side as far as taxes go? Want to be prepared prior to me closing.

Will I have to pay back any depreciation I already claimed on my home or large DC purchases??

[TomCopeland]

Closing your business

Can you tell me any down side as far as taxes go? Want to be prepared prior to me closing.

Will I have to pay back any depreciation I already claimed on my home or large DC purchases??

There is no other downside other than what I previously said. You won't have to pay any taxes on the depreciation you have claimed on your home until you sell your home.

You won't have to pay taxes on any depreciation you claimed on large items unless you used the Section 179 rule to deduct all depreciation in one year. If you did use that rule, you'll have to pay back some of the depreciation you previously claimed on your 2013 tax return.

[Unregistered]

Thanks Tom! So nervous about all of this. I am sure I will hav questions as I prepare my taxes next year.

Thanks!