Renting Bounce Castles
2010-02-03 by Eva RosenbergToday TaxMama hears from Shaunna in Washington State, who tells us. “I own a small rental business. Is the bounce castle I rent out considered an asset or inventory?”
Dear Shaunna,
That’s a good question.
We had a discussion about a similar issue recently – about video rentals. http://taxmama.com/video-rentals/
The concept is very much the same, so read the IRS audit guide described in that TaxQuip.
It’s not inventory, since you are not selling it. You have a depreciable asset here.
The question is, how long is the depreciable life to use.
Under the GDS (General Depreciation System) rules, you would use a 7-year life for anything that doesn’t fit anywhere else. (See link in Resource Center below)
Following the logic in the IRS audit guidelines for video rentals, you would use straight-line depreciation for 7-12 years
You can read more about depreciation in IRS Publication 946 http://www.irs.gov/publications/p946/index.html
No doubt, other tax pros will have some thoughts on this.
And remember, you can find answers to all kinds of questions about business expenses and other tax issues, free. Where? Where else? At TaxMama.com.
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