Depreciate or not

[Unregistered]

Client, s corp, purchased land in 2005 to build his medical office building.

Building will be constructed in 2006.

He paid for engineering, Architects fees, permit fees (total $42,000). Should I expense it or depreciate it?

If depreciate - will it be over 39 years?

Thanks!

[jainen]

put into service

Those expenses are part of the construction cost. Depreciate as commercial real estate starting the month when the building is put into service.

[Jiggers]

Depreciate

Those expenses are part of the construction cost. Depreciate as commercial real estate starting the month when the building is put into service.

Agree with Jainen!

[Unregistered]

Those expenses are part of the construction cost. Depreciate as commercial real estate starting the month when the building is put into service.

Thank you. But what do I do meanwhile. These expenses were paid out by check - Shoud I put it on Balance Sheet, in 2005, as constructin cost, as building will be finished in 2006.

[Bees Knees]

The costs would be added to the basis of a depreciable asset that has not yet been placed in service. So it would show up as a "fixed" asset with zero accumulated depreciation.

[Jiggers]

Construction in Progress

I set up an account called "Construction in Progress" under the Fixed Assets. That way I can keep track of the various expenses and when the building is completed, I transfer it to the Fixed Assets account and start depreciating.