Help! 2 Checks in 2 Different Yrs, 1 Capital Project, 1099/1096

[Nicholas LaGatta]

I gave my contractor a deposit in December and final payment in January for a large structural repair job on a property that is partially personal (I live in one room) and partially business (my LLC) as a vacation rental.

Now I need to send him a 1099 and send the IRS a 1096 (late on both of these, I recently found out), and figure out which tax year to apply the payments.  I can't get the 1099/1096 situation resolved until I know what year(s) to begin capitalizing.  The project began in December and wasn't finished until January.  Do I need two separate depreciation schedules starting in two separate years even though it is one project that didn't have any utility until completion in 2018?  Of course, I will plan to reduce the overall expenditure by my personal use of the property.  

Yes...I know I need an accountant, but I'm not going to be able to get one tonight or even this week, so please spare me that predictable response.

[Ashish Acharya]

@Nicholas LaGatta , 

To simply answer your question:

1) You do not have to worry about the depreciation for 2017 since the property will not be placed in service in 2017. You cannot depreciate property until you place it in service. You will place the property in service, once it is ready to be rented. ( rehabbed and advertised) 

2) About which year to capitalize, you capitalize whatever you have spent in 2017, and it flows through your balance sheet as an Asset. You dont actually have to send 1099s to capitalize the cost. (but I would recommend filing it). And you add additional cost spent in 2018 to the same property. Once you are ready to depreciate, you have one asset to depreciate.