Leased Building

[RLymanC]

Tennant leased for 3 years starting 10/01/2009, with option for 3 more years. Not a lease purchase of building.

Not in business untill 1/1/2010.

Spent $25,000 on improvements to the interior (lighting/flooring/paneling/painting, etc.)
in 2009. Made lease payments the last 3 months of 09.

Need a little help on 2009 tax return. Any chance of accelerated Dep.?

[BHoffman]

Tennant leased for 3 years starting 10/01/2009, with option for 3 more years. Not a lease purchase of building.

Not in business untill 1/1/2010.

Spent $25,000 on improvements to the interior (lighting/flooring/paneling/painting, etc.)
in 2009. Made lease payments the last 3 months of 09.

Need a little help on 2009 tax return. Any chance of accelerated Dep.?

Put into service in 2010 might mean no depreciation at all in 2009

[Kram BergGold]

How does this sound

I understand that it was not till 2010 that the doors were open for business but maybe just by the fact that the space was being readied for use means he was open for business in 2009. This would make all expenses deductible. I say this because I looked up start up expenses and the type of expenses you speak of are not start up expenses. If my idea does not fly, an dit very well might not, then I guess you capitalized everything and amortize it.

[DMICPA]

Amortization of the improvements

The question to me is the period of amortization. Considering it is a 3 year lease, I would consider amortizing over 3 years beginning in 2010.

The option for another 3 years is not conclusive that the option will be exercised and the only certain time now is the 3 years.

[AJsTax]

Improvements

to leasehold are 15 year if meet all the requirements or 39 year property. All furniture and fixtures should be removed from the list of improvements and depreciated at the correct period.
I am not aware of any way to take improvements on 3 years. But I am always open to new ideas.

[BHoffman]

I am not aware of any way to take improvements on 3 years. But I am always open to new ideas.

Me too. I haven't been aware of the ability to depreciate LH improvements based on life of the lease either. Always thought it had to do with the life of the asset.

[DMICPA]

What was I thinking

The leasehold improvements are depreciated as discussed above, not over the lease life. I don't know where I came up with the life of the lease idea. Maybe in the 1970s or some such time it may have been done.

When the lease terminates, any abandoned balance is a deduction.

[BHoffman]

The '70's were fun

http://www.that70sshow.com/

[taxea]

Technically if he has no income from the business in 09 and says it opened in 10 it would be a better idea to declare it all in 10.

[BHoffman]

Technically if he has no income from the business in 09 and says it opened in 10 it would be a better idea to declare it all in 10.

Technically, whether he has income or not in 2009 doesn't matter. What matters is when he opened for business.