Has anyone used cost segregation for a newly constructed single-family rental? I'm building a rental property and wondering if I should track construction costs by category from the beginning instead of doing a study later.

Yes, absolutely document with photos during construction! Take detailed pictures of electrical runs, plumbing rough-ins, HVAC ductwork, and specialty systems before drywall goes up. This visual documentation becomes invaluable for supporting your depreciation categories later. I'd also recommend keeping a detailed construction log noting dates and costs for each phase. When you install items like built-in appliances, custom lighting, or specialty flooring, photograph the installation process and keep all receipts with model numbers and specifications. One thing I learned the hard way - make sure your contractor understands you need separate line items for things like cabinet hardware, countertop installation, electrical fixtures, and flooring materials versus labor. The IRS likes to see clear distinctions between what qualifies for accelerated depreciation versus what's considered part of the building structure. Your future self (and your tax preparer) will thank you for this level of documentation. It's so much easier than trying to reconstruct everything after the fact!

Kinda silly question but does the price of the tote matter? Like if I spent $800 on a designer work bag, can I still deduct the whole thing or will the IRS be like "you could've bought a cheaper bag"?

Great question! I'm also relatively new to 1099 work and had similar concerns about what I could deduct. One thing that helped me was keeping a simple business expense log where I write down the date, amount, and business purpose for each purchase. For your tote bag situation, I'd suggest writing something like "Professional tote bag - exclusively used for transporting laptop, client documents, and business materials to meetings and co-working space." This creates a clear paper trail showing business intent. Also, don't worry about it being from Mercari - the IRS cares about the business purpose, not the retailer. Just make sure you have that receipt/purchase confirmation saved somewhere safe. Since you're under the $2,500 threshold, you can deduct it all in one year instead of depreciating it, which makes your taxes simpler too.

Great thread! I've been dealing with this exact issue for my home inspection business. What helped me was creating a clear business policy document that outlines when and why branded clothing is required. For driving instructors like Miguel, I'd suggest documenting that branded clothing serves multiple business purposes: 1) Professional identification for parents dropping off students, 2) Safety - helps police/emergency responders identify you as the instructor if there's an incident, 3) Marketing exposure while driving around town with students. I keep a simple log showing dates I wore branded items for business purposes, and I take occasional photos of myself in the field wearing them. My CPA said this documentation makes it very defensible as a marketing expense rather than personal clothing. One tip: consider ordering a few extra shirts specifically to give away as promotional items to completed students (as FireflyDreams mentioned). This creates a clear paper trail showing these are promotional materials, not just work clothes. The fact that some go to customers while others are worn by you for business purposes actually strengthens the marketing classification for all of them.

As a tax professional, I want to emphasize that the documentation suggestions here are excellent. The key distinction Miguel should understand is that as a business owner, you have more flexibility than employees when it comes to branded clothing deductions. For driving instructors specifically, I'd add another important point: your branded clothing serves a legitimate safety function that strengthens your deduction case. When you're in a vehicle with a student driver, being clearly identifiable as the instructor to law enforcement, emergency responders, and parents isn't just marketing - it's a business necessity. I recommend categorizing these expenses as "Advertising/Marketing" on Schedule C rather than "Uniforms" to avoid the stricter employee uniform rules. Keep receipts, document business use, and consider having your business policy state that instructors must wear branded clothing while teaching for safety and professional identification purposes. One more tip: if you're ever questioned about these deductions, the fact that you're required to maintain professional liability insurance and follow state regulations for driving instruction helps establish that your clothing requirements are legitimate business expenses, not personal choices.

Has anyone had experience with deducting mortgage interest in a situation like this? I inherited a rental property with an existing mortgage and I'm trying to figure out if I can deduct the interest on Schedule E for the few months I had it before selling.

I went through something very similar when I inherited my uncle's rental property last year. The key thing that helped me was keeping meticulous records of everything - every rental listing I posted, every potential tenant I showed the property to, every repair receipt categorized properly. One thing that might help your cousin is to create a timeline showing her rental intent from day one. Even though she only had a tenant for 3 weeks, if she was actively marketing the property, showing it to prospective tenants, and making repairs specifically to keep it rentable during those months, that demonstrates legitimate rental business activity. The IRS Publication 527 has good guidance on this - they look at whether you're engaged in rental activity "for profit" rather than just the duration of actual rental. The fact that she inherited it as rental property, continued that use (even briefly), and made good faith efforts to maintain tenants supports the Schedule E treatment. Just make sure she's being honest about repairs vs improvements. Things like fixing broken appliances, painting, minor plumbing repairs are typically deductible repairs. But if she added new features, upgraded systems, or made structural changes to increase the property value, those should probably be capitalized to basis instead. The passive loss rules suspension upon sale is legitimate - that's exactly what IRC 469(g) is designed to handle. She should be fine as long as she has the documentation to back up her rental intent and proper expense categorization.

This is such a complex decision with so many moving pieces! I've been following this thread closely because I'm in a somewhat similar situation as a healthcare professional considering the jump from W2 to business ownership. One thing that struck me from reading all the responses is how much the specific details of your contracts and relationships matter. The fact that your primary employer is trying to sell while being financially overextended, combined with your statement that the facility loves working with you, suggests you might have more leverage than you initially realized. Before diving into the LLC/S-Corp decision, have you considered reaching out directly to the facility to gauge their interest in working with you independently? Sometimes these conversations can reveal opportunities you hadn't considered - maybe they're frustrated with your current employer's financial issues and would welcome a more stable arrangement. From a risk management perspective, I'd lean toward keeping your primary W2 income stable during this transition period while building your LLC client base. The uncertainty around the business sale creates enough volatility without adding the income unpredictability of going fully independent right away. The tax benefits of business ownership are definitely real at your income level, but as others have pointed out, they only help if you're actually generating sustainable revenue. Given that you haven't started operations yet with your LLC, I'd suggest giving yourself at least 6-12 months to build that track record before making any major changes to your primary income source. What's your timeline for when you absolutely need to make this decision? The business sale process could take months, which might give you time to test the waters with your LLC while keeping your options open.

I've been through a similar transition in healthcare and wanted to share some practical insights that might help with your decision. The timing of your employer's potential sale actually creates a unique opportunity. Instead of rushing into a full LLC conversion, consider this a chance to negotiate from a position of strength. Healthcare businesses are heavily dependent on key personnel relationships - which you clearly have given the facility's preference for you. Here's what I'd suggest as a phased approach: **Phase 1 (Next 3-6 months):** Keep your W2 positions while starting to build your LLC client base with smaller contracts. This gives you real data on what you can actually earn independently while maintaining financial stability during the business sale uncertainty. **Phase 2 (6-12 months):** Once you have proven LLC revenue and clarity on the business sale outcome, you can make an informed decision about converting your primary income. By then you'll know: a) what your LLC can realistically generate, b) who the new owners are and what terms they offer, and c) whether the facility would work with you directly. Regarding the tax structure question - S-Corp election makes sense at your income level, but only after you're generating consistent business revenue. The administrative overhead and reasonable salary requirements aren't worth it for a startup LLC that's still building its client base. One often-overlooked advantage: if you do eventually negotiate directly with the facility, you might be able to structure it as a long-term contract that provides more income stability than typical independent work while still getting the tax benefits of business ownership. Have you had any preliminary conversations with the facility about their satisfaction with current arrangements?