Repair or Improvement-Black Mold

[equinecpa]

Have client who has home office.

They gutted 2 bathrooms due to black mold and also replaced a/c.

Would you consider this a repair or improvement?

[Lion]

Look at Units of Property. Did they replace central A/C for the whole house? One window unit? How many bathrooms are in the house? You may have to step through the new repair regs separately for each of those two types to classify as betterment, etc. Did they replace with same/similar materials or upgrade? There are some good flow charts out there to help you ask all the right questions.

[taxea]

is it ordinary and necessary to have two bathrooms for the office? A/C allocated with the same % as the office space.

[ATSMAN]

I say capitalize because it is going to be difficult to justify why 2 bathrooms and a new central AC for the whole house for a OIH deduction.
Use the business percentage for depreciation expense.