Today TaxMama® hears from Connie in the TaxQuips Forum with this question “What is the cost basis that should be used for property that had a HUD cost of $63,000 back in 1997 when the current owner acquired it? It was recently (2011) converted to a rental property. The 2011 value of the property is $305,000. This was never considered the owners main residence but was used to house other family members over the years. Finally would it make a difference if the owner had lived in the property at anytime in the last 14 years?”

Today TaxMama® hears from Klondike in the TaxQuips Forum with this question.  “In March, I purchased a new mobile home and placed it on property I own. It is skirted with wheels removed and set on cement pillars. My son lives in the home and pays rent. Is it best to depreciate the home for S/L 27.5 years and break out the land improvements (septic, water and electrical, wooden deck) for 15 years? Also, is it eligible for bonus depreciation or Sec 179?”

Today TaxMama® hears from Insha in the TaxQuips Forum with this question. “I run a daycare center in my home. I file a Schedule C on the cash basis. In February 2011, I bought an asset for my business that cost $2,000. I’m making payments of $100 per month on it. So, on my 2011 tax return, how do I list it as an asset for depreciation? Do I use the whole $2,000? Or do I use what I’ve paid on it this year; and just keep adding what I pay each year to the asset?