Single Member LLC Expenses

[Yardley CPA]

Would appreciate some input on how to record some expenses of a newly formed, Single Member LLC in New Jersey.  Taxpayer will be providing maintenance and repair services for an international equipment provider.  He will receive a 1099 - Non-employee Compensation form at the end of the year (not claiming this is the correct approach, just stating what I've been told by the client).  Here are some of his expected expenses:

• Vehicle purchase - I assume can be depreciated and also subject to yearly mileage per diem / or actual expenses?
• New Laptop - depreciated
• Home office deduction - taxpayer indicates office will be used solely for activities of the business.
• Taxpayer will be required to keep machinery and parts in inventory at his location.  He has a large garage he plans to use for this.  Can this structure be depreciated in any way?

Any other thoughts or suggestions are greatly appreciated.

[Abby Normal]

Vehicle - If you want to be able to switch between actual and standard mileage, you MUST take standard mileage the first year the vehicle is placed in service and you must use straight line depreciation.

Inventory - areas used for storage are included in the home office square footage. The problem is the garage is probably not heated or cooled so your utilities proration will be overstated if you just let the 8829 do the math.

[Popewaxx]

Yardley, yes any expenses related to the Garage (including depreciation) must be claimed as a home office deduction on 8829  . even if it is a separate structure you will need to claim it on 8829. luckily if it is separate it does not have to be the principle place of business, although it sounds like it is anyways . 

PS: don't forget about the necessary part year allocations in the years he starts and ends the home office usage. 

[Lion EA]

He can't depreciate AND use standard or actual.  Depreciation, maybe SL as Abby said to give flexibility, is used with actual expenses.  Standard includes a depreciation component in it that you will break out upon sale or trade-in.  Business percentage only, for the vehicle, computer, etc.

Usage logs and a mileage log will be important.

[Gail in Virginia]

2 minutes ago, Lion EA said:

He can't depreciate AND use standard or actual.  Depreciation, maybe SL as Abby said to give flexibility, is used with actual expenses.  Standard includes a depreciation component in it that you will break out upon sale or trade-in.  Business percentage only, for the vehicle, computer, etc.

Usage logs and a mileage log will be important.

And having a business logo put on the truck does not make all the mileage deductible because advertising.  I don't care what the barber told them.

[Abby Normal]

3 hours ago, Lion EA said:

He can't depreciate AND use standard or actual

Not in the same year, but you can't take mileage one year and actual the next year if you do it right.

And ATX calculates the depreciation component of the mileage rate in the years you use mileage. (Thanks, ATX!)

[Yardley CPA]

Thanks very much for the replies.  I have a current LLC client that I use standard on and do not depreciate the vehicle separately.  I also read that there is a component of depreciation within the standard but wanted to make sure I was not doing anything incorrectly.

I very much appreciate all the replies!