LLC new business - where do I enter the costs to upgrade my building (plumbing, air, septic, electric, concrete floor, etc...)

[Ledfoot65]

We converted a barn to run our dog business from and it required us to add plumbing, electric, septic, ac, framing, drywall and paint. Where do we enter these costs? I am in the Business Assets section and the only options I see are to select Computer/Telecom equipment, Tools/Machinery/Furniture, Real Estate Property, and Intangibles, Other Property.

Also, can we deduct or depreciate the barn itself? It was already on the property when we bought it in 2023.

[Mike9241]

first a multimember LLC (you said we)  is supposed to file a federal partnership return (form 1065) unless you reside in a community property state and the only members are husband and wife. Don't know if these states have different filing rules.   It's due 3/17/25 without an extension.  penalties for a 2-member LLC for filing late run about $400/ month but could be abated if you show reasonable cause 

the cost of those expenditures except for items costing less than $2500 are capital expenditures that would be treated as real estate and depreciated over 39 years beginning with the date the business began. some preopening expenses might be start-up costs that can either be immediately written off or amortized over 5 years.

yes, you can depreciate the barn. it requires you to segregate its cost from the rest of the property when you bought it. The lower of that cost or it's Fair Market value when converted to business use would be depreciated over 39 years beginning with the date the business started.

I strongly suggest you use a tax pro the first year. They're able to look over your records and prepare the partnership return if needed. 

[Ledfoot65]

Thank you!

I misspoke, it is a single member LLC owned by my wife. Do we need to file any special paperwork similar to what you mentioned?

I have been leaning towards using a tax professional this year the deeper I get into this. Thanks again.

[DaveF1006]

No. There's no special paperwork to be filled out. You would file this in your own personal joint return on a Schedule C.  If you want to use TurboTax, you need TurboTax Premium if you use the online version. If you use the software, you need the TurboTax Home and Business product.

Each upgrade you mention should be depreciated separately with its own depreciation schedule unless each item cost $2500 or less.  If this is the case, you can expense those items. Otherwise, there is a Business Asset section where you can report these separately as Mike9241 explains.

I also concur that a tax professional may be beneficial this first year just to get an idea on how to report this properly in your return.

@Ledfoot65 

[Ledfoot65]

Thank you. 

Since I have most of my 2024 return already in Turbo Tax and QBO, I was leaning towards using the TurboTax do my taxes this year. Are they a good option?