Business office Schedule C

[pnptrapp]

If you buy empty lots, that are not attached to your residence, nor have any buildings on them, and decide to build a garage to house your old vehicles in along with providing a business office, does this fall under Section 280A or does it fall under Section 167?

Thanks having a hard time finding any direction for tax treatment of the business portion. I feel that the expenses would be allocated between the office and the personal storage and be fully deductible for the business portion on the schedule C.

Do you agree?

 

[ColinCPA]

The empty lots would be capitalized to land, except for the cost of any exterior structures such as outside light fixtures and such that could be depreciated. Any costs of demolishing any old structures on the lots would be capitalized to land and added to the non-depreciable basis of the property.

In calculating the business portion of the property, I would take the total square footage of the property, compute the square footage of just the business office, and allocate the business portion of the taxes, interest, utilities, and depreciation.