Air BnB beds sold at a loss

[Mighty-Dollar]

In 2015 I purchased some beds and bedding for the purpose of renting my house furnished on Air BnB and VRBO. 4 1/2 months later, by 2016 I had no bookings, so I scrapped that idea in favor of a long-term lease as a mostly unfurnished home. Once my tenant signed the lease I sold the beds and bedding at a loss of over $1,344. So the question is how to enter this in TurboTax? Expense it as "Supplies"? "Other expenses"? As an "asset"? Inventory?
For now I entered it as an asset under "Tools, Machinery, Equipment, Furniture".
Then categorized it as "Office furniture, fixtures and appliances".
I checked off that the item was sold. Used 100% for business.
MACRS convention: I used the 1/2 year convention.
Confirm your prior depreciation: 0
Special Handling required: No.
Prior AMT depreciation: 0
Turbo Tax only shows a depreciation deduction of $393

[Jeremy]

You have a capital loss, which will go on Schedule D. It doesn't get written off as depreciation.

If you put the beds in service in 2015, you should have had a depreciation deduction in 2015.
("Confirm your prior depreciation" should be more than $0.)

[SeattleCPA]

That's not a capital loss. I don't even think it's a Sec. 1231 loss.

Probably the items you purchased should have been accounted for as "supplies" in keeping with the "new-ish" tangible property regulations (in force since 2013 or 2014)... Surely every item purchased was less than the $2,500 de minimis amount...

Then you'd report some other income equal to whatever scrap value you received.

This is important to do right in your situation because the Schedule C loss is an ordinary loss, shelters any kind of income, and is not subject to the same (rather constraining) limitations as a capital loss.

[Mighty-Dollar]

For clarity, these beds and bedding were NEVER used. I tried to rent the house on Air BnB for 5 months to no avail. I had NO revenue in 2015 and thus never reported ANYTHING for 2015. Revenue began in 2016 when I finally leased the house.

Someone whom I spoke to on the phone at TurboTax said to expense these items as "supplies". Since then I've gotten conflicting answers on the TurboTax forums (assets, inventory, etc). At least if I can indeed report it as supplies, then this is easy to enter in TurboTax as one number.

Thanks for your help. It seems like the people in this forum often know more about taxes than the so called experts in the TurboTax forum.

[Goldielocks]

The bedding I would classify as supplies, for certain, similar to buying new mop heads that you never actually used yet... as bedding should be well under a 2 year lifespan for a short term rental business.

The beds and mattresses would depend on the amount, as I would put durable furniture into a depreciable class, normally, but for a low total amount in that asset class, you may be allowed to record it elsewhere.    (see Seattle CPA suggestions about a $2500 cap?)

[Mighty-Dollar]

The most expensive item was less than $700 (a king mattress). Some items were sold all together to one buyer for one price. Hard to put a sell price on just one item.

Total purchase price of all of these items was $2,151. Beside beds and bedding, I sold 2 dining room chairs, kitchen flatware, drinkware and a modem.
Total loss was $1,736

[SeattleCPA]

Again, these items are all supplies or can be treated as supplies. The bedding--yes I get it wasn't used in the end--would have worn out quickly if you'd actually operated the airbnb venture... further, your *total* expenditure was less than the $2500 limit  and that limit is actually applied to individual items. Not the total.

I can't imagine any tax accountant thinking otherwise.

BTW, probably what you should have done is show the loss on your 2015 return... and then show the income (from selling this stuff) on the 2016 return.