I have now retired but have my business building leased.
These are the assumptions I am making. If I'm wrong, it matters.
- Your business was open and "in business" on Jan 1, 2019.
- You have closed your business at some time in the 2019 tax year (which is not yet over as of this post.)
- The building used for your business is a building you own. Weather there's still a mortgage on it or not does not matter.
- *YOU PERSONALLY* (not your now closed business) is the one renting the building out to another tenant now.
If using the CD version, any flavor from Deluxe or higher will do.
If using the online version then you *must* use the Self-Employed flavor.
A few points to note here that you may already know, but I post for the potential benefit of other readers.
When reporting the closure of the SCH C business you have to work through each individual asset to show it's disposition. While you may have sold a vast majority of the business assets, you did not sell the structure. So your disposition of the structure (and any accompanying land it's on that you may also own) is "removed for personal use". The date of disposition will be "at least" one day "AFTER" the business was closed. When working this particular asset through, if you are asked for a sales price then you reported the disposition incorrectly on a previous screen. So go back and on the screen that asks "Special Handling Required?" read the small print on that screen to understand why I"m informing you to click YES. Then click YES.
When entering this property on your SCH E for the first time your date placed in service will be the "exact" "same" "date" that was on your SCH C. When asked for prior depreciation already taken you will add together (from the SCH C) the amount taken for "prior years depreciation" and "current year depreciation" and you will enter that total in the "Prior year's depreciation already taken" box.
Now, (and this is important) if the structure being rented is *NOT* residential rental property (I doubt it is) then it gets depreciated over 39 years and the year count starts on the "in service" date as shown on your SCH C. In other words, it's still "commercial" property and not residential. So just like on the SCH C it just "continues" depreciation on the 39 year MACRS schedule with no change.
So if you add together the 2019 depreciation for the property on the SCH C and SCH E, that total should equal to (or be damn close to within $2.00) the amount of depreciation taken on the property in the previous tax year on the SCH C.
Basically, all you've done here is move a commercial property from a SCH C business where the income was "earned", to a SCH E business where the income is "passive". The MACRS depreciation should remain pretty much the same.
