Tax advice needed for partnership restaurant?
I am the bookkeeper for my friends who own a restaurant. They are husband and wife, in Virginia, opened for business in January 2010. I have several questions …
1. They lease/rent the building and most of the equipment. They pay ,000 month for "rent" and ,000 "lease liability". In Quickbooks I have it set up at rent expense for ,000 and then the lease as a fixed asset, so the lease liability ,000 comes off that. How do I account for the lease liability and that ,000 on the Form 1065?
2. The building has an upstairs which at one time was a small lounge/bar area for a previous restaurant. This couple remodeled the upstairs and made it into an apartment so they could live there and rent their personal home. I am accounting for the remodel costs as leasehold improvements, is this correct? Also, how do I then account for the leasehold improvements on the form 1065? I know I also have to separate expenses now for business versus personal use of the space and utilities. I also have to base it on the percentage of the year since they didn’t start using the personal space until July of 2010.
3. The business gross sales after returns and allowances was 2,000, so should I use materials and supplies expense instead of cost of goods sold, or am I better off to use the cost of goods sold since I expect their income for 2011 and beyond to exceed 0,000?
4. Depreciation (sigh) … The owners do not get a salary or guaranteed payment, and the business had a net loss of ,000 for 2010 (without figuring depreciation into that loss amount). Should I use Section 179 and carry it forward into the following years, or should I use a different depreciation?
I know this is a lot to ask and I may not have given enough info to answer all questions thoroughly, but any help is greatly appreciated!
Ok, here’s more …
1. So, I am depreciating the building / equipment as if it were purchased, even though it is only leased, is this correct? Is there a certain depreciation method I should use for this?
2. Why can’t I use leasehold improvements for the changes they made since they are permanent changes that will remain with the building (They added walls to make rooms and added a personal bathroom, with shower, tub, etc.) even if my friends don’t end up buying the property when the lease is up? I know they made these changes for their own personal reasons, but they do add value and change the purpose of that part of the property … in the future, it can be rented out as an apartment.
Yes, no, maybe?
3. According to 1065 instructions, because the business is a qualified small business, they can choose to expense materials and supplies that are not incidental rather than account for them as inventory. Am I misunderstanding that?
4. So, I should NOT use section 179 for depreci
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What should I do??????
Hi, okay I’m 15 and need to vent. So my mom and I were homeless and were blessed when she found this job with an apartment complex. Its not in a bad area either it is in Paradise Valley, AZ. So she took the job and we live here because she gets a discount. So at first the job was great, now she is seeing what assholes the manager and head tech are! They steal from the property, the head tech guy stole a ,000 PIECE OF EQUIPMENT!!! You know what people can do with that money? So not only is that happening, the head guy is trying to get my mom fired because hes angry that the manager didn’t hire one of the women that he recommended from his church (yeah did I mention he’s a pastor) So I am scared now even tho the manager loves my moms work and the manager gets compliments on her work from residents. So not only that but now we have a roach problem. We’ve told her multiple times and nothing. And a lot of people have complained and more people have complained about their air being broken but the other maintenance guy can’t do anything cause the head guy steals everything. And then the only people that get bonuses are the manager and the head tech of course. He also won’t buy my mom the supplies she needs and he is making her do the same apartments over again because he keeps making them dirty and so shes falling behind on her work and the manager is getting angry. My mom is looking else where now but what happens if she quits I no we have to move but will we get our deposits back or not? That was a lot of money for this piece of shit apartment. Now isn’t that wrong? I want to call the management company or even the state on their asses. Should I or should I keep my mouth shut?
Just in case your confused:
5 employees
manager
head tech
regular tech I guess
housekeeper-my mom
and leasing consultant who just sits around in the office shes fine nothing wrong with her
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Tenant’s Rights After Burglaries?
A friend of mine is living in an apartment complex in Florida, and his apartment was broken into 2 months ago. After reporting the incident to his landlord, no extra measures were taken to secure his apartment, and he was burglarized again yesterday, and a great deal expensive stereo and computer equipment was taken.
Although he doesn’t have renters insurance, he’s wondering if what happened is grounds enough to break his lease, as he obviously no longer feels safe there.
Just wondering if anyone’s had a similar experience or any advice…I tried searching tenant laws in Florida, but couldn’t find anything too specific on burglaries.
Thank you!!
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Can these people do this? Please help. ?
I am going to make this as detailed as possible. I’ve tried looking things up, but I’m just at a loss.
My mother and I recently moved to North Carolina after having years of trouble in Arizona. We have very little possessions, and simply planned on moving here with our pets and whatever we could stuff in our car.
For months my mom looked for a job, to no avail. We have very little money available, and we considered ourselves lucky when we found a low-rent "efficiency" apartment on Craigslist. The ad read as follows:
"New furnished efficiency apt with all utilities and even Direct TV, - miles to Southern Pines, Pinehurst. - minutes to Fayetteville/Sanford. No smoking indoors, no drugs. 0 plus last months rent of 450., call — before 8pm only."
(I’ve taken some information out; phone numbers and specific locations as they don’t apply to the matter.)
After months of searching, we thought we had finally found someplace to stay in the little town we wanted to live in. Of course it would only be for a few months, as the apartment was supposed to have a small kitchenette and was located in the landlady’s garage.
My mom talked to the woman renting out the apartment on the phone for almost a month before we arrived. They had the money for two weeks before our arrival, and new the date and time we would be there. Everything was supposedly set up (the beds, kitchenette, etc.), and they said it would all be ready when we got there.
After three days of driving, we came to our new home right on time at about 9PM, tired and dirty, only to find a 20 by 20 foot shed with a small bathroom and cluttered closet, filled with grooming equipment. The landlady and her husband began moving all of their stuff out of the building and putting together the beds when we arrived, as their small children ran around, jumped on the beds, and tried to feed everything they found to our dog. After being there for two hours, we could finally get some rest. We were starving, but unfortunately the kitchenette that they had been telling us about for weeks was no where to be found. My mother cried for most of the night, and woke up crying the next morning as she found that the place was even grubbier in the light.
We looked over the Craigslist ad and emails that had been sent, seeing that we had seriously been screwed over.
The situation only seemed to get worse when we realized they had lied to us about how far away we really were from town. It takes thirty minutes to get anywhere, and they had previously told us it only took seven.
The bathroom is 5 by 9 feet, and has an uncovered hot water heater, a shower "shell", a toilet, a sink that falling off the wall, and their dryer. When we leave the house, they come in and use the dryer without asking (they have a key).
There are no smoke detectors.
They never got the kitchenette. We had to buy a small dorm fridge and microwave, and we won’t even attempt to buy a stove as the room is too small. It is impossible to cook anything since there is no room, so when we get hungry we often have to drive thirty minutes to eat. This is extremely inconvenient.
Internet was supposed to be set up, but we had to do that as well. We had to buy two routers because their children broke the first one, and I had to network all the computers. I’m 16, and it’s kind of funny that every time this lady now has a problem with her computer, she comes to me. She’s also asked me to make her a website, and she even had the nerve to ask me to help her post a Craigslist ad for their old house because she didn’t know how!
They didn’t ask us to sign a lease…and now we know why.
We’ve been living here for almost three months. My mom still can’t find a job, as it is a close knit community and you need connections to get in anywhere.
They have tons of dogs (at least 16) that are always barking. They have them in cages outside, and they don’t feed/water them or clean the cages. When we walk outside we get attacked by flies and the smell of dog poop. It’s just not sanitary.
Living with a single mom can be hard, and we thought things might get better if we moved out of Phoenix since it was getting so congested. Turns out we’re in even deeper crud than before.
I honestly feel this woman manipulated the situation in such a way that she would profit from it. I think it’s truly wrong, as she knew we were coming from out of state, had no where else to stay, and couldn’t personally come and look at the apartment.
So my first question is, are they are laws that prohibit this? Can this woman post an ad on Craigslist that is selling one thing yet you get another? Are there federal laws or North Carolina state laws that require a person to have a license to rent-out an apartment? Would they even be allowed to rent this shack out?
We will hopefully we out of here by the end of August, and we were just wondering if there is anything we can do to stop this from happening again to other people, and to maybe even get back the money we had to pay to live in the awful place.
Any help or advice is appreciated. I’m sorry this ended up being so long.
Thank you.
Actually, we wanted to live in Aberdeen. My father lives there (my mother’s ex-husband), and he said it would be easy to find a job at the local hospital since my mother has 10 years experience in the field. He said it was cheaper to live here, and that we would love it.
We’d been planning for six months, and thought that we had found a decent place to live temporarily.
I know my mother messed up when she chose this place, and she realizes she did too. She feels terrible for putting us through this.
They did send pictures. Trust me, the pictures look nothing like what we ended up getting. They even sent a picture of the lake nearby, saying it was part of their property, and later told us it wasn’t when we got here.
Yes, we may sound stupid, but I think what these people are doing is wrong. They are taking advantage of an already sucky situation, and as parents they should not have knowingly rented this place to a single mother and her child.
Debra, we have called the humane society. The landlady claims to be a "groomer and breeder of dogs", when all she is doing is running a puppy mill. So many of her animals have died in just the few months that we’ve been here that I don’t even want to let her near my dog. She won’t give us a straight answer about what the humane society said when they came here.
They may not be breaking any laws renting this place to us, but they sure are doing something wrong with those dogs. Even the horses are mistreated.
Thank you all so much for your help.
Has anyone here seen that movie ‘Funny Farm’?
I feel the same way as they do in that movie. I’m surprised the mail man doesn’t throw our mail at us.
Thanks again for all of your help. And to ‘Expert Realtor’, I appreciate your answer. You live in NC, have you heard of Ellerbe? That’s where this place is. When we tell people that, they look disgusted that we live out this far (it’s pretty funny, actually).
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