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Level 2
posted Feb 20, 2023 8:39:49 AM

Removed Depreciated Appliances from Rental Service but Didn't Report Them

In prior years (less than 7 years) I removed from service appliances in my rental house but did not know I was supposed to report them as a sale of business assets in the year they were removed.  They had zero value when removed but there was no recapture of the depreciation. What should I do now to rectify this?

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2 Best answers
Expert Alumni
Feb 20, 2023 12:51:17 PM

 

 

I believe what you mean is that you retired the assets but did not sell them. If so, then you wouldn't need to recapture any depreciation on them. If they had undepreciated amounts, you can report the sale of them for $0 dollars and you will get a deduction equal to the undepreciated amounts. So, you would not necessarily have to report the disposition on your tax return.

 

You would only have to recapture depreciation if you sold the assets or put them into personal use. If you put them into personal use, you may have to recapture accelerated depreciation on them, and if you sold them for a gain, you would need to recapture any depreciation taken to the extent of the depreciation or gain, whichever is less. 

Expert Alumni
Feb 20, 2023 2:44:35 PM

Yes, you can remove the assets by simply deleting them from your return.

 

To do this in TurboTax Online you can follow these steps:

  1. Open or continue your return in TurboTax
  2. Use the magnifying glass icon to search for Schedule E and click the Jump to link in the results
  3. Click Edit for your rental property you need to delete the assets for
  4. Scroll down to the Assets section and Edit for the asset(s) type
  5. On the summary screen for the assets, click the pencil icon to see the summary list of the specific assets
  6. Click Delete for the assets you retired

@davidmloch 

3 Replies
Expert Alumni
Feb 20, 2023 12:51:17 PM

 

 

I believe what you mean is that you retired the assets but did not sell them. If so, then you wouldn't need to recapture any depreciation on them. If they had undepreciated amounts, you can report the sale of them for $0 dollars and you will get a deduction equal to the undepreciated amounts. So, you would not necessarily have to report the disposition on your tax return.

 

You would only have to recapture depreciation if you sold the assets or put them into personal use. If you put them into personal use, you may have to recapture accelerated depreciation on them, and if you sold them for a gain, you would need to recapture any depreciation taken to the extent of the depreciation or gain, whichever is less. 

Level 2
Feb 20, 2023 1:16:56 PM

Thank you for your  reply.  Since I retired the assets in prior years at $0 value (junk) and with no further depreciation available, can I delete them from Form 4562 Depreciation and Amortization Report in year 2022 without any record required by the IRS or do they need to remain on Form 4562 always since their original value was depreciated?

Expert Alumni
Feb 20, 2023 2:44:35 PM

Yes, you can remove the assets by simply deleting them from your return.

 

To do this in TurboTax Online you can follow these steps:

  1. Open or continue your return in TurboTax
  2. Use the magnifying glass icon to search for Schedule E and click the Jump to link in the results
  3. Click Edit for your rental property you need to delete the assets for
  4. Scroll down to the Assets section and Edit for the asset(s) type
  5. On the summary screen for the assets, click the pencil icon to see the summary list of the specific assets
  6. Click Delete for the assets you retired

@davidmloch