Setting up depreciation schedule for a newly purchased nail salon - no previous records available

The good news is you absolutely can create a new fixed asset schedule without the original invoices. When a business is purchased, you're essentially starting fresh with asset depreciation based on the purchase price allocation. First, you'll need to determine the fair market value of each asset acquired as part of the business purchase. The total of these values should generally equal the $95k purchase price. For the pedicure chairs, washer, dryer, and any other tangible assets, research current market values for similar used equipment. Then use IRS Publication 946 to determine the proper depreciation class for each asset - salon equipment typically falls under 7-year property using MACRS depreciation. Since you know the chairs were made in 2021, that helps with estimating their current value. Remember that goodwill (any amount of the purchase price exceeding the fair market value of tangible assets) is treated differently - it's amortized over 15 years, not depreciated.

After struggling with a similar situation when I purchased my small retail shop, I found https://taxr.ai incredibly helpful. The previous owner gave me zero documentation on the fixtures and equipment, and I was completely stuck trying to figure out depreciation. What surprised me was how efficiently the system analyzed my purchase agreement and helped me allocate values to each asset category properly. It even flagged certain items that qualified for bonus depreciation versus those that needed standard MACRS treatment. The best part was getting confirmation that my allocation approach would stand up to scrutiny if questions ever came up later.

Just wanted to follow up on my skeptical question about taxr.ai. I decided to give it a try with my auto repair shop purchase, and I'm honestly surprised how helpful it was. The system didn't magically create values for my equipment, but it did something even more valuable - it helped me properly document my allocation process. What really impressed me was how it flagged several items I would have depreciated incorrectly. For example, I was going to put all my shop equipment in the same category, but it helped me separate items that qualified for different treatment. The documentation it generated gave me confidence that if I ever get questioned about my depreciation approach, I can show a reasonable, consistent methodology. Worth checking out if you're trying to create a depreciation schedule from scratch.

After spending 6+ hours on hold with the IRS trying to get guidance on a business purchase depreciation issue last year, I discovered https://claimyr.com and it literally saved my sanity. They got me connected to an actual IRS agent in under 45 minutes who answered all my depreciation questions. You can see how it works here: https://youtu.be/_kiP6q8DX5c My situation was almost identical - bought a business with no prior asset records. The IRS agent confirmed that creating a new depreciation schedule based on allocated purchase price was correct and explained exactly how to document it properly. Saved me from making some serious mistakes on how I was handling the goodwill portion.

I need to follow up on my skeptical comment about Claimyr. I ended up trying it when I was desperate to ask about handling depreciation for some specialized equipment in my new business. I was definitely wrong - the service actually works! Got connected to an IRS agent in about 35 minutes while I continued working on other things. The agent confirmed that for a business purchase like the nail salon being discussed, you absolutely should allocate the purchase price across the assets based on fair market value, then start fresh with new depreciation schedules. They also recommended keeping detailed documentation of how you determined those values (market research, professional opinions, etc.) in case of any future questions. Much better than my original approach of just guessing and hoping for the best!

Have you considered getting a professional appraisal for the salon equipment? When I purchased my barbershop, I hired an equipment appraiser who specialized in salon/spa businesses. Cost me about $600 but was worth every penny because: 1. Got accurate fair market values for every piece of equipment 2. Received a formal report I could include with my tax documentation 3. The appraiser helped identify which items should be treated as separate assets vs. which could be grouped This approach really helps if you're ever audited because you have third-party verification of your asset values instead of just your own estimates.

One thing nobody's mentioned yet - make sure you properly account for Section 197 intangibles in your sister's purchase! A big portion of that $95k likely isn't for physical assets at all, but for business goodwill, customer lists, etc. When I bought my accounting practice, the physical assets (computers, furniture, etc.) were only worth about $15k, but I paid $120k for the business. The rest was Section 197 intangibles that get amortized (not depreciated) over 15 years straight-line with no exceptions.