inventory for home staging

Forum|Forum|6 years ago
February 24, 2020
2 replies
20 views

Is the furniture and items owned considered inventory

We have a general partnership

DavidD66

Level 15

No, not inventory - unless you're in the furniture business. Inventory is your supply of products you sell and/or use to make the products you sell. If you provide services, then you would have no inventory. Your furniture and items owned would be fixed assets (furniture and fixtures) or expense items, depending upon the cost.

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superior interior stagingAuthor

Level 2

Thanks

So do we list it as an expense or an asset on your forms.

Also, we use our personal vehicles so do we take the mileage on our personal returns?

ThomasM125

Level 15

You need to add your furniture and fixtures in the assets/depreciation section where you enter your business expenses. When you add each asset, you may be given the option to take an expense allowance for the item, in the form of a "section 179" deduction or "special depreciation" allowance.

If you choose one of those options, you may be able to deduct as an expense the full cost of the item purchased in the year that you purchased it. Otherwise, you would have to deduct the cost in the form of depreciation over a period of years.

If you are filing a partnership return, then you would deduct the business use of the auto on your partnership return.

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Carl

Level 11

Something a lot of folks don't seem to understand about depreciation.

All depreciation, including SEC 179 and the special depreciation allowance is not a permanent deduction. In the future when you sell or otherwise dispose of the business and/or assets, all depreciation taken is recaptured and taxed in the year of sale or disposition. So while you'll see us use the term "depreciation deduction", it's important to understand that deduction is not permanent.

There is one instance when that depreciation may (or may not) become permanent. That's when the owner of the business or asset dies while the asset is still "In use" for the production of income and it gets passed to a heir.

REI-hiker

Level 2

@VictoriaD75 @Carl11_2 This is very helpful thank you both!! It’s important to make this distinction especially since I’m dealing with flips and not rentals and want to lower my current year taxable income as much as possible. Sounds like utilizing the safe harbor election will be my best bet for my staging furniture. Thanks again!