Announcement

Collapse
No announcement yet.

Necessary or ordinary business expense

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Necessary or ordinary business expense

    Sole proprietor of a senior care center joined a membership at a fee of $5,950 to purchase furniture/supplies at a reduced price. Sole proprietor was purchasing an entire house of furniture for the new business. I don't think this fee would be considered deductible, but wanted to run it by other tax preparers to get their thoughts.

    #2
    There's more

    to this than your client is telling you.

    Comment


      #3
      If the fee is saving her money and it was for the business it would be a deduction. Even if it didn't end up saving her money it should qualify. No one said you had to make smart decisions. I write off my Sam's club membership fee and I usually spend more then I intended each time I go to that place.

      Comment


        #4
        Sam's Club

        >>I write off my Sam's club membership fee<<

        Sam's Club charges an annual fee. Is that what this $5950 covers, a single year? I would consider whether it might not be a non-depreciable intangible asset.

        Comment


          #5
          Amortizable

          Originally posted by jainen View Post
          >>I write off my Sam's club membership fee<<

          Sam's Club charges an annual fee. Is that what this $5950 covers, a single year? I would consider whether it might not be a non-depreciable intangible asset.
          at least. But $ 5,950 is a bit high I think. Costco and Sam's are cheaper.
          ChEAr$,
          Harlan Lunsford, EA n LA

          Comment


            #6
            Originally posted by ChEAr$ View Post
            at least. But $ 5,950 is a bit high I think. Costco and Sam's are cheaper.
            I've seen these clubs advertised. Supposedly, member's can purchase big-ticket items like furniture & appliances at very large discounts. I'm not sure of the full line of products available. The fee to join is very high. My guess is this membership is part personal/part business.

            Comment


              #7
              The fee

              is for a two-year membership for Direct-Buy. Being the client was furnishing a complete house for a senior citizen care facility, she thought the discount she would receive when purchases the furniture would surpass the cost of membership. Deductible??

              Comment


                #8
                Originally posted by peggysioux View Post
                is for a two-year membership for Direct-Buy. Being the client was furnishing a complete house for a senior citizen care facility, she thought the discount she would receive when purchases the furniture would surpass the cost of membership. Deductible??
                I would consider this a valid business expense. If the business is cash-basis or accrual-basis taxpayer? If accrual, the most conservative approach would be to consider 1/2 of the fee a prepaid expense since it's a two-year membership. If cash-basis, I'd deduct the entire amount the first year.

                Comment


                  #9
                  Yet another possibility

                  is to include the one time fee in cost for the furniture, since that was primary reason.

                  That way, it's section 179 all the way!
                  ChEAr$,
                  Harlan Lunsford, EA n LA

                  Comment

                  Working...
                  X