Business & farm

The answers to your comments and/or questions follow.

1. Comment: Had she not received a grant, this is certainly the way it would be handled, however, because she received the grant, I'm thinking the amount that is depreciated should be reduced by the amount of the grant. 
   1. No.  The grant is taxable and therefore you do not reduce the cost of the improvements before listing the asset for depreciation. The taxable income becomes part of her cost basis in the improvement.
2. Comment: Had she not received a grant, this is certainly the way it would be handled, however, because she received the grant, I'm thinking the amount that is depreciated should be reduced by the amount of the grant. 
   1. Enter the full amount of the grant money by selecting Cash..... and directly entering the income from the Form 1099-G.  It is not a requirement for you to enter the form itself for the business income. There are several items that can be reported on the 1099-G, and in many different ways.  For this reason you should simply enter the income without using the form entry method.
3. This is a repeat of number 1. The asset should be listed at the full cost and not reduced by the amount of the grant. However there is a DeMinimis Safe Harbor option that may be used. Information is shown below for both real estate capital improvements and other assets.

Improvements Election

This election is an option you can take each year that lets you write off some building improvements as expenses instead of assets.

Here are the rules you need to meet to take this election:

• Your gross receipts, including all your other income, are $10,000,000 or less.
• Your eligible building has an unadjusted basis of $1,000,000 or less.
• The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits: 
  • 2% of the unadjusted basis of your building or
  • $10,000

This election for building improvements is called the Safe Harbor Election for Small Taxpayers. If you decide to take this option, a form called Safe Harbor Election for Small Taxpayers will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

1. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2020? mark the Yes button and click Continue. 
2. On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue.
3. On the Now, let's review each item you bought screen, mark whether all your new assets cost $2500 or less. 
4. If you mark that every item cost $2,500 or less, you will be brought to the Rental Summary screen.  You have elected the De Minimis Safe Harbor provision. 
5. If you mark that some cost above $2,500, you will be asked Did you make improvements to rental in 2020?
6. If you say Yes, you will be taken through the screens for the Improvements election.
7. If you say No, you will see the screen Do you have any items that aren't covered by your elections?  Proceed through the screens to enter these assets. 
8. On the Rental Summary screen go to the Expenses section and click on the Start/Update box. 
9. Continue to the Any Other Expenses? screen and enter the description and amount paid for the assets. Click Continue when finished.  

De Minimis Safe Harbor Election - Other than real estate assets:

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off/deduct items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.

If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

Here are the rules you need to meet to take this election:

• You don't have an applicable financial statement (most people don't).
• You have a consistent process for how you record expenses and assets.
• You record these items as expenses on your books/records.
• The cost of each item as shown on your receipt is $2,500 or less.
• Business Tab > Business Income & Expenses > Edit > Other expenses > Other Miscellaneous Expenses
• Enter Description and amount (not entered as assets under this election)
• Note:  Because you are under the $2,500 threshold, you are not required to used section 179.  You can list these expenses under Miscellaneous.  If the amount was over 2,500, then you would enter these as assets and then would be able to choose the 179 option.
  • Maintain a complete record with your tax return should you need to verify these items at a later time.
  • Click the screenshot to enlarge and view

Credits for easier access for individuals with disabilities to enter and move about business establishments is different than for items that allow you to sell services to those individuals.