New shop build - can it be deducted?

Discussion in 'Business Operations' started by queen of spades, Mar 12, 2011.

  1. meets1

    meets1 LawnSite Gold Member
    Posts: 3,757

    After re-reading this post what is everyone so scarced for? Every other post says RED FLAG - if biz is legit you do what you can, basically re-investing with in yourself.

    I suppose you guys who buy $50-$60K trucks don't depreciate the truck out or itemize fuel, tire repair, etc. Cuz if you haul that boat to the lake and the IRS see's this you'll be red flagged.
     
  2. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Posts: 853

    I believe red flag is it is owned by you personally. Everything you just mentioned would be considered an asset of those companies.
     
  3. TMlawncare

    TMlawncare LawnSite Bronze Member
    Posts: 1,197


    You don't think the dentist office is owned by the dentist. You don't think the construction companies new facility is not owned by the owner. Here in town a roofing company just purchased 3 acres and built a 60 X 125 foot new building on it for his company. You don't think he can claim this $400k expenditure as a business expense even though its his new company building? Are you kidding me. This is basic business 101. If it is an expense related to the operation of the business you can claim it.
    Don't you own a company? Does you company have assets. Do you have trucks, mowers, trimmers, skid steers, tractors, trailers, etc? Those are all assets owned by the company. You own the company. Do you claim any of those on your taxes? They are assets after all owned by the owner.
    You see an asset is an asset as long as it is vital to the operation of the business. Why do you think we can write off our work boots as a business expense?
     
    Last edited: Mar 16, 2011
  4. TMlawncare

    TMlawncare LawnSite Bronze Member
    Posts: 1,197

    After a little more thought (little research) I think that maybe I am wrong. The problem is that property had a unique trait. It does not depreciate like other assets, therefore is not an expense. Now you can deduct the interest because that is money that you can't get back. Any money paid in on the principle can not be counted as a business expense.
    Personally we still rent our facility so I have not be down that road of purchasing. Learn something everyday.
     
  5. P.Services

    P.Services LawnSite Fanatic
    Posts: 6,322

    TM, you get a ataboy from me. Takes a big man to chew some one out and then come back and say maybe I was wrong. I woulda just left the thread and never came back before I admitted I was wrong. Ataboy!!!
    Posted via Mobile Device
     
  6. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Posts: 2,132

    TM - the differnce is that he personlly owns the property. It is not in the companies name. Sam Walton does not personally own the walmart building, Walmart Stores inc owns them, that is the difference. When you own a company (llc, corp, ec...) it is seperate from you personally, doing things that intertwine the two is a red flag. For example if you try to claim a portion of your home's value as a business expense because you have a home based office. It's a red flag because the IRS knows that many people will also use this room for other things such as allowing the kids to do homework in there. Or a home shop may double as a spot to change the oil in the family car. hese are just a few of the things they look for. They get alot more advanced than that i know the MA Dept of Revenue is tied into all the state agencies, you register a boat, ATV, dirtbike, any vehicles, they instantly know and if your registered vehicles add up to over a certain percentage of your income - your red flagged. My accountant had warned me alot about checking everything twice, even 3 times. With these new tax regulations the IRS is going to be looking for reasons to get their foot in the door for audits because they know theres a good chance of finding something they can nail people for
     
  7. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Posts: 853

    Well said.
     
  8. meets1

    meets1 LawnSite Gold Member
    Posts: 3,757

    That may be true but heck if you change oil in your wife's car, you (business) charge you (the family) $10.00 to change oil. Sure a little money out of your left pocket into the right pocket. Then explain how farmers can right about all there expenses off in one year, depreicate out the 100 x 100 shop all while storing there boat, 5th wheel, and whatever else toys they have or son has or whatever.

    There is a famer in my area that built a big a*& steel shop to the tune of 1.35 million dollars. His board room table sits 24 men. A kitchen like no other. A bathroom than 99% of women would kill for. 100% right off. Says he'll do over a couple years.
     
  9. TMlawncare

    TMlawncare LawnSite Bronze Member
    Posts: 1,197

    Sometimes when you are just flat wrong, you have to take it on the chin. We lease our shop so we can deduct our payments. Its an expense but if you buy its an asset that does not depreciate. I just was not thinking about it the right way.
    Thats one thing you can count on about lawnsite, it you are just plain wrong someone will straighten you out. Thanks guys.
     
  10. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 874

    The value of the buiding (land excluded) can be depreciated over 39 years.

    Set up a comapny that holds the real estae and lease back to your business.
     

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