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These questions are for a CA Tax Attorney. I have invested…

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These questions are for...

These questions are for a CA Tax Attorney.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I have invested $30,000 in wine tasting room in Santa Barbara, CA

Accountant's Assistant: Is there anything else important you think the Accountant should know?

The investment was to purchased equipment and items of furniture, etc, I want to depreciate the total amount of my investment of $30,000 all in 2017 taxes

Submitted: 6 months ago.Category: Tax
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Customer reply replied 6 months ago
How do I file? As an investor or a partner or a partnership or silent person? What forms
Answered in 7 minutes by:
1/3/2018
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,622
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi Jerry. Lane here. We spoke yesterday.

...

You can certainly do this if you OWN the property, (or the partnership can if the partnership owns, as we discussed yesterday).

...

As we discussed, the business income limit will limit the amount you can deduct. (Income from the wine tasting room itself OR other income of the partnership).

...

You can carry unused Section 179 depreciation amounts, not able to be used to reduce taxable income in 2017, to future years.

...

Here's the IRS guidance on this:

https://www.irs.gov/publications/p946#idm140672412370912

...

And heres a very readable overview:

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

If you own this as a sole proprietor, that would be the most straightforward. You simply file a schedule C along with your tax return. You'll see the entry for section 179 on the form on line 13:

...

Here's the form: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

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Customer reply replied 6 months ago
I do not received any profit from the business.
I only purchased the equipment in 2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

Then you cannot depreciate it

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Customer reply replied 6 months ago
Well, tell me how I can deduct my investment, how do I need to set it up in the company
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

Take that back ... you CAN depreciate REGULAR way (not accelerating all into the first year in business ... and take the first year's depreciation ... IF the wine tasting room was open for business in 2017. But section 179 is limited to business income, as we discussed yesterday

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Customer reply replied 6 months ago
ok
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

Investments are not deducted (UNLESS you can satisfy the requirements of section 179).

...

They are capitalized and then depreciated over their IRS published class life.

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Much of what you've purchased has a five year class life

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ANd THIS CAN (as long as you were open in 2017) be deducted against your other income on our return. (The first year's depreciation)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 6 months ago

The depreciation would flow from the schedule C to line 12 of your personal return as a negative number, thereby reducing the other taxable income (your employment income) on the return. But again, his would be disallowed by IRS upon any audit, should they be able to prove that the business did not open it's doors in 2017.

...

(Not necessary to HAVE customers, but necessary to be able to take them)

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Please let me know what questions you have from here:

...

Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986

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