Bill Lloyd wrote:

- quote -

I would think that she should report the asset as a half
share in the property. The fact that the other half
of the business is not taxable in the US is irrelevant.

I don't have a copy of form 8829 in front of me, so
I can't comment on specific line numbers, except to
note that all amounds on the form must be in US$, rather
than CDN$.

- quote -

For 39 years vs. 40 years, it might be worth it not
to have to make AMT adjustments, even if the 39 years
were allowable. We're talking about a $16 per year
deduction difference?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Situation is that a husband and wife run a bed and breakfast
out of their home and are claiming depreciation on business
portion of square footage at 60%. On Form 8829 Part III
Depreciation I understand how to get to Line 38 "Business
basis of building" but business and home is in Canada and
both spouses are resident in Canada. Wife is US citizen and
long time Canadian resident and husband is Canadian citizen
and long time Canadian resident. Only wife files a US 1040
return as married filing separately. Canadian husband only
files a Canadian return.

2003 year was first year of business so I am not sure about
depreciation. House is owned equally and jointly by both
spouses. Because only she files a US return would I be
correct in my thinking in reducing her "basis of building"
by 50% due to fact that husband doesnt file US return.

For example line 35 is 150,000.00 and value of land on line
36 is 80,000 as per assessment leaving a basis of 70,000 on
line 37 times business basis equalling (line 7) at 60% =
42,000.00. Because only US spouse files US return would it
be correct to only take half of the 42,000.00 as the
business basis for depreciation because only she would be
subject to possible recapture of depreciation and capital
gains/loss when and if property is disposed of? Also if I
am reading publication correctly depreciation would be over
40 years using Alternative Depreciation System (ADS) because
property is outside of US and not 39 years for
non-residential real property?

Thanks

Thanks.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->