Discussion:Non-licensed day care provider business deductions

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Discussion Forum Index --> Tax Questions --> Non-licensed day care provider business deductions


DR BRISKET (talk|edits) said:

1 February 2007
For an unlicensed day care provider, I know the regulations are clear about not being able to deduct any business use of home expenses, but what about all other ordinary expenses, including snacks and meals served?

JR1 (talk|edits) said:

February 1, 2007
?? Really? I wouldn't care whether they're licensed or not...and indeed, licensing isn't even required in my area unless you're doing I think more than 4 kids...? Hoping that's not a hijack.

Solomon (talk|edits) said:

1 February 2007
JR is correct - state law governs. Publication 587. Sec. 280A(b)(4)(B)(iii).

Pegoo (talk|edits) said:

1 February 2007
You just treat it as if it was any other business. Licensing has nothing to do with taxation of income.

JR1 (talk|edits) said:

February 1, 2007
*whew*

DR BRISKET (talk|edits) said:

1 February 2007
Per Publication 587, page 11, to claim the business use of home deduction for a day care provider, "You must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a day care center or as a family or group daycare home under state law." This part is clear. But my other question still stands: wouldn't other ordinary business expenses still be deductible--including the snack and meal allowance?

Kathyt (talk|edits) said:

1 February 2007
Is it against state law to provide day care services if you aren't licensed? If a person is allowed to provide those services; then I'd say take the other expenses. But if it is against the law to provide the services in the first place, then no deduction for something that violates state law.

Deback (talk|edits) said:

February 1, 2007
Agree with JR,Pegoo, and Solomon. The answer to your question, Dr., is yes. Deduct all expenses attributable to the day care business.

Solomon (talk|edits) said:

1 February 2007
Deback - you sure you agree with Pegoo on this one?

Glmpllc (talk|edits) said:

1 February 2007
My reading of 280A(b)(4) is that if a license is required, then you must be licensed in order to take the deductions for business use of the home. Your right, state law controls whether a license is required. You can't determine whether a day care provider qualifies for business use of the home deductions without knowing how the licensing statutes apply.

San Diego (talk|edits) said:

1 February 2007
Kathy,

Does that mean I can't deduct the costs of bootlegging?

Glmpllc (talk|edits) said:

1 February 2007
Interesting note (at least to me)...gross income from illegal activites is taxable but related expenses are not deductible. I'm not saying it applies in the context of an unlicensed day care...but bootlegging, drug trafficing, brothels, etc.

San Diego (talk|edits) said:

1 February 2007
that's how they got Capone

JR1 (talk|edits) said:

February 1, 2007
The brothel isn't legal? That'll make the wife happy.

Glmpllc (talk|edits) said:

1 February 2007
depends on where it's located...or so I've been told

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