Discussion:Scorp depr for home business building
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Discussion Forum Index --> Tax Questions --> Scorp depr for home business building
| 5 November 2009 | |
| My new S corp client built a separate structure on his home property for his electrical business, (garage for employee vehicles, storage, offices, etc.) Can I depreciate this structure on the 1120S since it's a separate structure, even though it's built on his home property? | |
Death&Taxes (talk|edits) said: | 5 November 2009 |
| Yes, assuming the Corporation paid for it. | |
| 5 November 2009 | |
| 39 years.
just wait until he sells, though. Not a pretty picture. Tell him to die instead. He will fare much better. | |
| 5 November 2009 | |
| oh, and never close the S corp. That would be worse than selling. Dying is his best option. | |
Death&Taxes (talk|edits) said: | 6 November 2009 |
| As Kevin points out, it makes it kind of messy if he sells the residence and the building. If he put up the building personally it wouldn't qualify for exclusion from gain, but here you have the added mess of the sale running through the S Corp. | |
| 6 November 2009 | |
| Or would/could the separate structure still be legally owned by the stockholder, even though the costs of the structure are depreciated by the corporation.
The sale of the property would create a 1231 gain (hopefully) for the stockholder and a 1231 loss for the corporation? And if the corporation were on life support, transfer ownership to a friend/relative (who does not also co-own residence) and let them take the 1231 loss in liquidation?? | |
RoyDaleOne (talk|edits) said: | 6 November 2009 |
| I agree the S Corp ownership of the building is the best route if the taxpayer is in Florida.
Note that the building is not for rent to outside parties, but for use by the taxpayer's main business. The added "mess" and I don't see one is a one time thing. | |
Harry Boscoe (talk|edits) said: | 6 November 2009 |
| The taxpayer doesn't have a business; his S corporation has a business.
Who's the client, the shareholder/homeowner/taxpayer or the corporation? Is the garage built on the swampy end of the property? Get ready for a casualty loss. | |
Harry Boscoe (talk|edits) said: | 6 November 2009 |
| Aren't there some laws about who owns the [real property] stuff that's been built on one's property no matter who's paid for the [real property] stuff? | |
| 6 November 2009 | |
| There are Court Cases about beneficial and equitable ownership.
Also if the corporation rents the underlying land from the stockholder, I guess the building could become property of the stockholder, tax free, at the end of a lease. But that is a controversial position to take. | |
RoyDaleOne (talk|edits) said: | 6 November 2009 |
| Ground lease is this a new idea? | |
