Question

URGENT!!

Claire owns and operates a veterianary surgery. During the year ended 30 june 2020 she inaccured the following expenditure.
10 August 2019 re-plumbing of surgery due to faulty pipes $4700

16 October 2019 replace linoleum floor in surgery due to water damage from burst pipe $1800

2 dec 2019 painting worn exterior of surgery $5600

1 march 2019 sealing surgery car park which was previously dirt $15400

Explain the treatment of repair versus capital improvement using the above facts. Calculate the total deduction available to claire for the year ended 30 june 2020 are ( to the nearest dollar):

Answer 1

veterinary practice owners can deduct up to 20% of their qualified business income from pass-through entities on their individual tax returns. The IRS defines a pass-through entity as a sole proprietorship, partnership, limited liability company, or S corporation.

Repairs or maintenance cannot be included in a property's cost basis. However, repairs that are part of a larger project, such as replacing all of a home's windows, do qualify as capital improvements. Renovations that are necessary to keep a home in good condition are not included if they do not add value to the asset.

As per IRS guideline following are total deductions get by Claire

Burst pipe $1,800

painting worn exterior of surgery $5,600