Business Start Up Costs

[John Valko]

I have a client that has been purchasing equipment during 2010 such as backhoes, trenchers, small bobcats and trailers for hauling the equipment in preparation of starting up an equipment rental business. He is currently storing the equipment until he gets his location ready. Can he start depreciating or expensing the equipment he has purchased prior to actually opening for business or does he have to wait until his location is ready and he actually starts renting the equipment out.

[AJsTax]

Seems to me

to be all start up. You can not depreciate anything unless you are in business. If he is not yet renting anything out it is all personal use property and no depreciation. Depreciation would start the day the equipment is put up for rent.