Janet is renting space for her small business. The space does not come with floor, wall,...

Janet is renting space for her small business. The space does not come with floor, wall, or window coverings.

Which tax issue needs to be considered before Janet invests in upgrades to the rented space?

Expert Solution

Janet acquirer space for her business and space does not come with floor, wall and window coverings.

If Janet wants to invest in floor, wall and window coverings she must record these expenses in her business books as expenses on assets to capitalize these expenses as floor, wall and window coverings are items to be in used in business for more than one year. When Janet records this investment in her business books as assets, Janet will qualify to deduct depreciation on these items from her business income. In this case title of these assets will remain with Janet

So this way Janet may deduct her expenditure of coverings through her business income.

In another view Janet may invest in these items and record these expenses in name of landlord and can set off rent from this due. On other hand landlord may claim depreciation on these items from his rental income by mutual understanding between both of them. In this case title of these assets remain with landlord.

So above are two methods for addressing tax issues, which Janet may consider before investing in up gradation on floor, wall and window coverings.

ekkarill92 answered 1 year ago

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