2013 Depreciation Rules

[zorrambo]

As far as I can tell from the IRS website there is only one way to depreciate furniture purchased in 2013: the 7 year straight line. It appears there are no special rules that apply unless I am missing something. I think I apply the half-year convention.

Two mattresses purchased in July 2013 at $1567. Business started Aug. 1, 2013. My business basis is $125. 14.2%(Table %) is $18.

Does this look right? Am I missing any special rules?

Thank you

[TomCopeland]

Depreciation

As far as I can tell from the IRS website there is only one way to depreciate furniture purchased in 2013: the 7 year straight line. It appears there are no special rules that apply unless I am missing something. I think I apply the half-year convention.

Two mattresses purchased in July 2013 at $1567. Business started Aug. 1, 2013. My business basis is $125. 14.2%(Table %) is $18.

Does this look right? Am I missing any special rules?

Thank you

You can use the MACRS rules that allow you to accelerate your depreciation. Also if you bought it new in 2013 you can use the 50% bonus depreciation rule. Use the half year convention.

[zorrambo]

You can use the MACRS rules that allow you to accelerate your depreciation. Also if you bought it new in 2013 you can use the 50% bonus depreciation rule. Use the half year convention.

Is it possible that I can use the 50% Bonus Depreciation rule if my TS% is less than 50%?

If so, here is my thought process based on what you suggested...

On July 28, 2013, I bought two mattresses for $1,567. The basis for depreciation is $125. The bonus depreciation is $62.50 (50% X $125). That leaves a basis for depreciation of $62.50 ($125 - $62.50). Assuming the mattress is 7-year property and using the half-year convention, the first-year depreciation is $8.93 (14.29% X $62.50). Thus, the total regular and bonus depreciation deduction for the first year is $71.43 ($62.50 + $8.93). The depreciation basis for future years is $62.50. Thus, for 2014 the depreciation is 24.49% X $62.50 or $15.31.

Thank you.

[TomCopeland]

depreciation

Is it possible that I can use the 50% Bonus Depreciation rule if my TS% is less than 50%?

If so, here is my thought process based on what you suggested...

On July 28, 2013, I bought two mattresses for $1,567. The basis for depreciation is $125. The bonus depreciation is $62.50 (50% X $125). That leaves a basis for depreciation of $62.50 ($125 - $62.50). Assuming the mattress is 7-year property and using the half-year convention, the first-year depreciation is $8.93 (14.29% X $62.50). Thus, the total regular and bonus depreciation deduction for the first year is $71.43 ($62.50 + $8.93). The depreciation basis for future years is $62.50. Thus, for 2014 the depreciation is 24.49% X $62.50 or $15.31.

Thank you.

You are correct, assuming your time-space % is 8% (which is extremely low). Yes, you can use the 50% bonus rule even if your time-space % is below 50%.

[zorrambo]

Yes, my TS% is 8%. Thank you again for your help.

[TomCopeland]

time-space %

Yes, my TS% is 8%. Thank you again for your help.

I can't help but ask why is your time-space % so low. Did you start child care in the middle of the year? If so, your total number of hours in the year are those hours from the day you started caring for children until the end of the year.

Did you include your basement and garage in the space used regularly for your business? Most providers use these spaces regularly.

[zorrambo]

I cared for one child starting in August, afternoons only. Total hours were 202 plus 82 when child not present for cleaning, etc. Aug. 1 to Dec. 31 comes to 3672 hours. That is 8% for the time percentage. I used my entire home regularly.

[TomCopeland]

time-space%

I cared for one child starting in August, afternoons only. Total hours were 202 plus 82 when child not present for cleaning, etc. Aug. 1 to Dec. 31 comes to 3672 hours. That is 8% for the time percentage. I used my entire home regularly.

You are correct!