What is the proper way to depreciate expenses to turn garage into home office for an LLC? There were permanent changes made to a one car detached garage.

[kirillbylkov]

Changes were installation of side door, split AC unit.  I use this office as a place to conduct business for a partner LLC

[tagteam]

Are you being reimbursed for the expenses from the partnership?

Is the garage being used exclusively and regularly for partnership business?

[kirillbylkov]

Yes to both questions. Thanks!

[tagteam]

I'll page @Rick19744 for input but you can't "double-dip" in the sense that the MMLLC is reimbursing you and then deducting that payment and you are also trying to take a deduction on your personal income tax return.

[kirillbylkov]

Ah ok, I believe I misled you to think that I am trying to take a deduction on my personal tax return. I am only looking to expense the improvements for the LLC. 

[tagteam]

I'm going to wait for @Rick19744 to respond but did the LLC actually pay for the improvements (and other expenses)?

[kirillbylkov]

No, it didn't. I paid for them from personal funds

[tagteam]

See https://www.irs.gov/taxtopics/tc509

Unreimbursed partnership expenses if that's in the operating agreement.

[Rick19744 · Accepted solution]

This is going to be a difficult issue to address on a forum such as this, as there are way too many questions:

• I haven't seen a definitive confirmation that this is a multi-member LLC (MMLLC)?
  • This does make the issue "murkier" as noted below.
• What does the operating agreement say in the way of reimbursement for member expenses?
• Exactly what "business" is handled at your "garage"?
• Was the change a necessity?  No other option(s) before the change was done?  Or one of convenience?
• Unless the MMLLC required the change / update, it's going to be difficult.
  • The garage is most likely not titled in the name of the LLC
  • You personally paid for the garage changes
  • Are you getting reimbursed for utilities? RE Tax (portion attributable to garage)?
• Assuming the garage change was necessary and required, my recommendation is to have the LLC pay out a guaranteed payment; whether that's over time, in total, etc.  Certainly this will be subject to tax, but that could be grossed up.  I'm not sure I would be comfortable with any other method in light of minimal facts.
• You may be best served to meet with a tax professional where you can have a one-on-one discussion with all the facts.  This forum is not really conducive for this type of discussion.