handling a capital expenditure

[Jim99]

I have a new client that is a sole proprietor who sells art. She works out of a stand-alone studio on the family property owned by her and her husband.  They put $30K into renovating it to suit her needs. The studio is not currently considered an asset of the business, and the family takes a home office deduction on their tax return. They would like to be able to include the renovation expense as part of the business, and I'm wondering what would be the best way to handle this.

[qbteachmt]

What was done?

Sink, cabinets, walls, lighting, kiln, rollup door, flooring, bathroom? Are you sure it all is capital improvement? What is removable? What would be equipment? What will be wear and tear?

[abctax55]

Are you sure OIH is the correct treatment for a stand-alone studio?

[Jim99]

Thank you for the response. I don't know that that is the correct treatment. It's a new client and this is what they told me. I'm trying to figure out the best way to handle this. 

Jim

[sjrcpa]

Do you have a complete copy of last year's tax return to see what was done hen? (It may or may not be correct.)

[PATAX]

Jim it sounds like it may be more of her principal place of business than a home office. But I am not an expert on that. Maybe Iron Man or Bob or Jim or someone else can help.

[Jim99]

Sorry for the delay in responding. This is what they did: converted the first floor of the building into a gallery space for clients to come visit and see/purchase the artwork and antiques. Doing this involved relocating an obstructive bathroom, raising the ceilings, adding skylights/ task lighting, and repainting. The renovation began in late March and concluded in June.

Doesn't seem like anything would be removable. 

[qbteachmt]

What's on the second (other) floor(s)? Is the building mixed use?

If it's not a retail operation (open to the public walkin), perhaps this is additional basis to the primary residence and they keep OIH. Or now it meets ADA and is retail space?