@Eileen19 wrote:
I do the books for my husband’s business. That’s the “we.”
So the complete purchase of the shed and the finishing it out are all deductible as a large business expenses that is depreciated?
In general, any purchase of something with an expected life of more than 1 year is an asset. The shed is definitely an asset, and will depreciate. Normal business property depreciates over 39 years but a shed might have a shorter life. Then, improvements to the shed (utilities, insulation, etc.) are costs for improvements to the asset that are also depreciated. For example, office furniture is depreciated over 7 years, while land improvements (sidewalk, parking lot, etc) are depreciated over 15 years. This is all covered in publication 946.
There is a safe harbor that allows certain tangible assets with a cost less than $2500 to be expensed instead of depreciated--this might include tools, or a vehicle trailer. I don't know if the shed improvements (utilities, kitchenette, toilet, etc.) will be eligible for that kind of handling, one of the other experts may know, or Turbotax may know when you enter the improvement (if you are eligible for special treatment, you should be asked).
And of course, you can only include costs you pay for. You can't include the value of your own time or labor. (You can also include costs like required inspections and permits.)
To put it more simply--if you had bought the shed as a fully finished office for a higher price, that would be a depreciable asset. So if you buy a cheaper shed and pay someone to build it out for you, you can likewise depreciate the costs of the shed and the build-out.
