Finance Questions? Ask a Financial Expert for Answers ASAP
Congrats on your expanding business!
The cost of the studio will be capitalized and depreciated over 27.5 years
You cannot write off the entire expense currently.
Once operational, you can deduct the cost of utilities, repairs, anything to do with that particular office
Can we charge the business reasoble rent for the space and put it on our schedule ?e
Well, the problem with that would be that you would then have to claim rental income on your personal return, and that would mean you would deduct rent and claim rental income at the same time, which is a wash
If you charge rent, you can't depreciate.
But yes, you could claim rent and put it on schedule E
But you can set up an accountable plan and then you would pay reasonable rent and would not have to claim the amount as income
You can read more about that, here: http://www.taxalmanac.org/index.php/Home_Office_Expenses_of_a_One-Man_Corporation
And you can find a blank copy of an accountable plan template here: http://rockstarcpa.tumblr.com/post/17363280552/s-corp-home-office-deductions
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