Gotchya. I appreciate your explanation, that helps a lot.
Sorry to dwell on this, but I just want to make sure I'm asking the right question. One thing I mentioned in my original question is that in 2016 (our first year in business) we used the simplified home office deduction. There weren't any entries for our house on form 4562 or 8829, so is it safe to assume 2017 will count as the first year of depreciation on our home if we are entering our expenses instead of using the simplified office method again? Or does the simplified method still depreciate our house?
On a side note, while I was waiting on a response to my last question I experimented with entering the AC improvement both ways to see if either way affected my taxes more than the other. When I added the improvement to the cost basis it reduced my taxes by $27, but when I removed it from the cost basis and added it as a home office asset, it reduced taxes by $208..
Nevertheless, I really only care that I do everything correctly, regardless of how it affects my taxes.
