All Forum Posts by: Scott Davidson

@Jeff B. Not true. Directly from Pub 463 

"Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose."

https://www.irs.gov/pub/irs-pdf/p463.pdf

The standard rate is certainly easier to deal with.

Not enough info to provide a solid answer. One item to note is that if you use the actual cost method, you must use SL method of depreciation rather than MACRS if you use the vehicle 50% or less for business.

One slight correction to the above. The amount used for depreciation is lower of ADJUSTED BASIS (not purchase price) or FMV. Adjusted basis is purchase price plus improvements less any depreciation or casualty losses already taken. It sounds like you have completed extensive improvements so be sure to add those to the purchase price when figuring adjusted basis.

https://www.irs.gov/pub/irs-pdf/p570.pdf#page8

This IRS publication provides the info you need. The income is sourced in PR, so you will have to file a PR return. You can take a credit on your federal return for taxes paid to PR on form 1116. 

Those small dollar improvements can be expensed under the de minimis safe harbor election. As for actual capitalizable expenses, the recovery period depends on the asset.

https://www.irs.gov/businesses/small-businesses-se...

https://www.irs.gov/publications/p527/ch02.html

Potentially both. Google "whatever state its located in filing requirements." Each state has different rules but usually if income sourced in that state is under a certain threshold you wouldn't be required to file in that state. Same goes for the management company. The income is traced to its source. 

You have to use the lower of the adjusted basis or the FMV on the date of conversion. It sounds like the adjusted basis is lower. You are correct that of the 85k you should apportion a percentage to land. Add your improvements to that number for the home iteself for your adjusted basis. Then a portion of that number is split because you still live in part.

You can fix prior returns to include back depreciation you didn't take. When you sell, the IRS assumes you took the depreciation and it is recaptured.

The costs are added to the basis. The cost is depreciated over 27.5 years if a SFR. The expenses will go against rental income.

https://www.irs.gov/instructions/i8606/ch02.html