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I personally own a vacant piece of land across from my

I personally own a...

I personally own a vacant piece of land across from my towing company which is Incorporated and I am a 51% owner. The Towing comp will be leasing the land from me, but as a towing company it is required to have a fence up. The towing company paid for the fence, how do I deduct this? as an 100% expense?

Accountant's Assistant: When we are ready I'll take you to the appropriate web page. Which tax year is the deduction for?

2018

Accountant's Assistant: Anything else you want the Accountant to know before I connect you?

The total dollar amount spent was $5,800.00

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Answered in 10 minutes by:
6/23/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,907
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. …. My name’s 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.

I’m reading your question now.

Bear with me a couple of minutes while I type up my response.

….

Then if you have further questions we can go from there

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First, The IRS says that fences usually are depreciated under the General Depreciation System and have 15-year useful lives. There's also something called bonus depreciation that DOES apply to this (what IRS would call an improvement)

...

But let me check to see if this might qualify for up front expensing under Section 179 ... Section 179 WAS expanded under the new tax law ... just a sec

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Nope so sorry. See this: "Real Property does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures and the components of the permanent structures (including improvements not specifically covered on the qualifying property page). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences."

...

But again you DO qualify for bonus deduction here, under the new rules.

...

The rule allows you to accelerate your depreciation deduction for the first year you purchased an item. For 2016 and 2017 you can deduct 50% of the depreciation in the first year. In 2018 it drops to 40% and in 2019 to 30%.

...

So this means that you can deduct 40% in the first year and then have to deduct the remaining cost over the 15 year period. (50% if this was done in 2017)

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Customer reply replied 1 month ago
Ok...So the company will be the one depreciating it....even if it is on rental land?

If it was paid for by the company... Taxation follows ownership.

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Customer reply replied 1 month ago
Got it

Your positive rating, using those stars on your screen, would be appreciated.

That’s the only way JustAnswer will compensate me for the time here.

Thank you!

Lane

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Customer reply replied 1 month ago
Do I categorize it as a Fixed asset?

It IS a fixed asset ... most account for specifically under (create an account for it in the chart of accounts as) "land improvement."

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Your positive rating, using those stars on your screen, would be appreciated.

That’s the only way JustAnswer will compensate me for the time here.

Ask Your Own Tax Question
Ask Your Own Tax Question

Other questions? Still with me?

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,907
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 1 month ago
Thanks!

You're very welcome ... and thanks much for the rating

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Lane
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