How do you tell TurboTax to prorate depreciation of business assets for a partial year when you close your business during the year?

[rcw61977-gmail-c]

I told TurboTax that I had closed the business during the year.  I did not sell the business nor any of the business assets.  I looked at the depreciation worksheet and TurboTax appears to have computed a full year depreciation instead of a partial year.  I thought the depreciation should be prorated only through the last day of business operation.  Do I have to override TurboTax's calculation?  Or?

[DianeW777]

Yes, you are correct. It should be a partial year of depreciation.  

No, you do not have to do any kind of override.

When you are going through the assets there is a screen asking for the date the asset was 'sold, retired, stolen, destroyed, disposed of, ...'.  Be sure you enter the date retired and the depreciation will be limited. Click Yes to Special Handling.  This will carry the partial year of depreciation to the business activity.

Maintain all of your records because these assets must be included if sold to recapture any depreciation used during the business use period.

[rcw61977-gmail-c]

Thank you for the quick reply.  Your suggestion did the trick.  Since I had answered the general TurboTax question about when I closed my business in 2021, I had assumed that TurboTax would stop depreciation all business assets as of that date.  As you suggested, I still have to "retire" each asset separately to get the partial year depreciation for each.  I suppose that gives flexibility in the event someone were to close down their business "incrementally" over the course of a year, i.e. "retire" assets on different dates throughout the year.  I will be selling the office condo itself this year, and as you suggested, will need to recapture related depreciation as income (to the extent that I have a gain) when I file my 2022 return next year.  Thanks again.