How best to 'pause' all sched C expenses?

Forum|Forum|2 years ago
February 18, 2024
1 reply
7 views

My client didn't operate her business in 2023. We are thinking that it has been more of a hobby. She had a studio built some years ago & we have been depreciating that building. She is not quite ready to 'dispose' of the business, however, she'd like to not take any deductions- since she didn't work the business. She had hoped to wait a year or two & see if she wants to permanently close shop. How is the best way to handle this? I have enter NO expenses and changed business % of studio to 1% (which takes no depr & PS won't let me enter 0). I am just not confidant that this is correct.

Thank You!

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Just-Lisa-Now-

Intuit Community Champion

Changing business use to a low % is about as good as we have for pausing depreciation on a Sch C.

You could enter a disposal date with zero sales price and that will remove the asset from the return, then youd have to add it back if they go back into business.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

F

Frustrated-in-IL

Level 8

If I am understanding you correctly, this is what I do.

Leave the percentages alone. As Lisa alluded to, at some point you will need put stuff back in. Who can remember what that will be X number of years from now? Since this is depreciable real property, I take the undepreciated basis and put it/add it to land. I make a sub-schedule indicating the amount and date it was done. That will stop all depreciation. If it is ever placed back into service, I know what I have to remove and whatever other modifications I will need to do at that time to make things calculate correctly again.

S

snowshoeAuthor

Level 3

Thank you! I’ll stayed tuned for a couple of days. I suspect that she has moved into hobby zone & wont be operating a business. Seems like entering a dispose date & zero sales price would result in a huge loss. She also has some loss carryover from prior years. I guess they will just want to studio to revert to personal use.

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