No, you cannot expense the materials, but the building you had a contractor build in your backyard for an office would be a fixed asset and would be listed as an asset of the business and then depreciated. The improvements that you made to finish the building would also be part of the cost of the building and not listed as an expense but as an asset and depreciated. Home Office
To determine depreciation the issue boils down to is the shed a "structure" or a "building."
I could not specifically find a shed for a clothing business in IRS cases, but I did find plenty of them with reference to farms and dog breeding businesses. If the shed is a structure that is not permanent in nature then you can use the 179 deductions under personal property.
If the shed is a "building" then it is real property and does not qualify for the Section 179 Deduction. Real Property is typically defined as land, buildings, permanent structures, and the components of the permanent structures (including improvements). Other examples of property that would not qualify for the Section 179 Deduction include paved parking areas and fences.
As you can see it depends on the facts of your situation. If you use the 179, just keep your receipts to show the inexpensive nature of the shed if you ever get audited you can make your case that it's a structure:)
