These are leasehold improvements. You enter them as an asset which is depreciated over 15 years.
If you leave the leased premises before the end of the 15 years, the balance is deducted as an expense in the year the lease is terminated.
Some things to point out here.
We opened a new business
So if "we" opened the business, then does "we" own the business too? This matters, because my screen shows you're using TurboTax Self-Employed. If "we" own the business then "we" can't use TTX Self-Employed to report business income/expenses. (the one exception below).
So it matters what type of business this is for correct reporting. Partnership? Multi-member LLC? S-Corp? C-Corp? Something else?
In the community property states of Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin if you have a multi-member LLC where there are only two owners, those two owners are legally married to each other, and those two owners will be filing a joint 1040 tax return, they have the option of splitting all business income and expenses down the middle and each partner reporting their share of the business income/expenses on a separate SCH C for each tax filer on the joint return. That means your joint 1040 return will have two SCH C’s included with it – one for each owner. But this can present its own problems in the event of divorce, separation. The issues can become even more compounded upon the death of one of the owners. If that deceased owner’s will does not pass all assets to the surviving partner, then that surviving partner can find themselves in a tax hell, not to mention the problems that can arise with the “new” owner or owners.
We had to pay for major modifications to the space to fit our need
Those are referred to as "leasehold improvements". If these improvements are something that you can NOT physically take with you when/if you relocate later, then this gets entered in the "Business Assets" section and make sure you properly classify it for the leasehold improvement it is.
Just to clarify the answers above, the category is "Qualified Improvement Property", not "Leasehold Improvements".
And it MIGHT be "Qualified Improvement Property". It depends on what exactly was done because "Qualified Improvement Property" excludes certain things.
Qualified improvement property.
Generally, this is any improvement to an interior part of a building that is nonresidential real property, and the improvement is section 1250 property and is placed in service by you after 2017 and after the date the building was first placed in service by any person.
However, a qualified improvement does not include any improvement for which the expenditure is attributable to any of the following.
The enlargement of the building.
Any elevator or escalator.
The internal structural framework of the building.
My husband and I are the owners of the LLC.
The LLC that we own is the company that made modifications to the building we rent. The modifications are things we cannot take with us. Physical modifications like additions of permanent lighting fixtures attached to the warehouse ceilings, electrical work to accommodate the power needs of the equipment, removal of walls, etc.