[Oasfaa] RE: In-home day care question

[Larry Hollingsworth]

Hi again,

There appears to be a clear consensus regarding assessing the value of an in-home business. A summary of the repsonses are as follows:

I would only count the inventory and equipment.  Basically, you want to determine what the business value would have if it were sold.  Since if the student (or parent) sold the business, they probably wouldn't sell the house, I would not count the house.

Also, I don't know that a daycare, particularly a home daycare, would have much value, since it is primarily a service business.  Kind of like a hair stylist.  They may have a few thousand dollars in equipment, but basically their business is something that they do and can't be sold.
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I only  use equipment and inventory values when it is a business in the home.  
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I think you are on the right track of using the business inventory/ equipment/assets as "value of business" if it is in the primary residence; unless this is a separate building (separate from house garage converted into a daycare center).
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I think you could use an allocation based on the value of the house if you used only the square footage used exclusively for day care. Basically the calculation for a home office deduction for the Internal Revenue Service.
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I only consider the equipment value.
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For what my opinion is worth, I agree with your last statement (since it's part of the principle place of residence, we don't count it as a resource). I think it's as fair as possible. I find the "value of business" question irritating anyway. To me, it's more often a case of, "Mr. Smith, if I were to make you an offer, how much do you want for you business?"
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I would treat it just like I do the family farm vs. and investment farm.  It is their principle place of residence therefore, would not count the home itself.  I would only count tangible equipment.
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I use only the business value  -- not home.  
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I would probably only asses the parts of the business that could be sold.  This would include only the items related to day care and not the home. If a student tells me they have a business I normally consider what it could be sold for today.
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Thanks Marla, Vicki, Lee, Luke, Karen, Charlie, Deanna, Sherry and Jerome for taking time to help me out.

Larry