My Sister and I are partners in a Party Rental Business, We do our business based out of our houses which are right next door to each other. We use her entire garage Solely for party equipment (Tents, Tables, Chairs, etc) and we use my extra room in my house as a Home office. Can we write off her garage and my home office??
Currently we are only DBA, not llc or incorporated.. dont know if that makes a difference.
Also should we get LLC'd??
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See IRS Publications 334 and 587.
Yes you can but be prepared for an audit. The IRS does send someone eventually to check out the premises Do not put one thing in either the room or garage that is not business related. Do a limited partnership to protect your assets from liability. No sense losing your home because someone decides to sue.
If you file a Partnership return, your home office and garage expenses may be deducted on the partnership return and passed on to your individual returns in proportion to yor partnership interests.
If you both are independent contractors, you may be able to deduct the home office, and she may be able to deduct the garage on your respective Schedules C.
This assumes all other qualifications for the deductions have been met.
as long as the space has exclusivity about it, you state soley for the use of storage and home office, anything of a personal nature in either space would eliminate it
and no, your dba is fine, incorporating is much more involved and confusing and if you have to ask you are definitely not ready for it
remember the space you are using in comparison to your total space is your % that you take
ie if your total space is 1800 SQ ft and the amount you are using is 300 sq ft. that is 1/6th of your total
And of course you and your sister are doing your partnership income tax return correctly and completely for this partnership business you are both operating next door to each other.
Instructions for Form 1065, U.S. Return of Partnership Income
Partner's Instructions for Schedule K-1 (Form 1065)
Use the search box at http://www.irs.gov for any of the material that you will need.
Hope that you find the above enclosed information useful for your situation and good luck to you.