Tax Year Prior to 2020: Do I report section 179 expense recapture if i have $0 income?

[gina1]

Yes. It's up on my screen. You've got me very happy right now!

[Cattlerancher]

I'm going to send you a page snip in an answer below, it can't be done in a comment.

[cl4]

I used the Home & Business version of Turbotax last year and I had to calculate the recapture myself and attach the spreadsheet to my return, which was also a pain in the butt because I couldn't file electronically....had to use snail mail.

[gina1]

That stinks. You'd think Turbotax would have a better system than this - even if you have to calculate the recapture, you should be able to enter it in and have it file. :(

[Cattlerancher]

Just my opinion, but even worse is that this blank form will be included in the print center under "All official forms required for filing" (so you can print it). When/if you e-file it looks like it's part of your complete tax return and will be e-filed, then when you actually e-file and TurboTax says "Your tax return was successfully e-filed" but yet TurboTax does not give you notice that this one fill-in the blank form was excluded. I have been assured by TurboTax that this is correct and until improved, the way it is. I think there is a lot more to e-filing than we realize and is out of the control for TurboTax to alter. Please note though that any built in supporting detail page (usually a pop up type fill-in page) is e-filed.

[Cattlerancher]

Can you find this page when you Edit your asset?

[gina1]

No, it's different than that :(

[Cattlerancher]

Are you at your Asset Summary?

[Cattlerancher]

Did you start to "Edit" your asset yet?

[gina1]

Yes, after hitting "Edit", It asks you to review LY's info, then asks if I stopped using the item for business purposes. Click Yes. Next screen: Date of sale or disposition. Then it gets messy. This is the page that says to just enter the date and then handle it in Business Income/Sale of business property. [[If you keep clicking through, it then asks if any special handling required - converted to 100% personal use is one of 7 scenarios. The "learn more" is my snip from the other link. If you say "yes" it says depreciation is zero, says it will transfer this to the correct form, and goes back to the asset summary. The one I'm currently looking at is on year 3 of 7 :(. It's not doing any recapture through this route.

[Cattlerancher]

Say yes to converted to 100% personal use-----You are on the right track. I'm not sure but you maybe only liable for sec 179 recapture if convert to personal use in the first year or two. Quite sure everything is automatic and correct when you Edit the asset this way.
I have to step out from the computer for an hour or two. I'll do a  sec 179 test entry later today or this evening in my H&B to confirm the rules.

[gina1]

Thank you. The help screen that says just enter the date and handle the rest outside of the assets page is what worries me. Nothing seems to happen on the forms view if I stay within the asset and finish that way. Thank you for your help - you rock!

[Cattlerancher]

You said you took sec 179 on an asset, now (in 2016) you have "Edited" the asset to personal use so it will be removed from your Depreciation Report next year. Now the amount of sec 179 taken needs to be written down as to remember the exact amount.
Now go to "Sales of Business Property" and click the box "A recapture of a previously taken sec 179". (view second page snip above)
Click Continue,
Sec179 and Listed Property Recapture click Yes,
Listed Property Recapture, leave blank
Click Continue twice,
At Sec 179 Property Recapture enter the amount taken in the upper box, assuming you took 100% in the year you purchased the asset the lower box is left blank.
Click Continue to see the amount you need to recapture.
This amount needs to be reported in "Other Income" of your schedule C.
Now go back into your schedule C business, under Business Income and find Other Income to enter this amount.
Done.
Looks like you must recapture 100% taken. I thought you would get an partial recapture but that is only on listed property (vehicles and other business property used no more than 50% for business).
If you have more than one asset, the total of all sec 179 taken will be entered here as described above.
To produce a statement in TurboTax, go into Forms mode, click "open form" (upper left hand corner) and in the search box type "Blank Form". Manually enter your assets individually to show how you arrived to the total amount you added to "Other Income". Once this is complete, you will need to print and mail your tax return to the IRS because this form does not e-file with the other forms. Let me know how it goes, if you have more questions tomorrow, I'll be glad to help.

[gina1]

Ok. Thank you.

[gina1]

OK, it looks like I can take partial depreciation if it's refigured as though it wasn't taken as Section 179.
2016 Publication 946. Turbotax has the half year convention listed on my Asset Summary, that on Table a-1 (p. 71) <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p946.pdf">https://www.irs.gov/pub/irs-pdf/p946.pdf</a>

(p. 24) Figuring the recapture amount.
To figure the amount to recapture, take the following steps.
1. Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Begin with the year you placed the property in service and include the year of recapture.
2. Subtract the depreciation figured in (1) from the section 179 deduction you claimed. The result is the
amount you must recapture.
Example.
In  January  2014, Paul  Lamb, a calendar year taxpayer, bought and placed in service section 179
property costing $10,000. The property is not listed property. The property is 3-year property. He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. He used the property only for business in 2014 and 2015. In 2016, he used the property 40% for business and 60% for personal use. He figures his recapture amount as follows.
Section 179 deduction claimed (2014)
........
$5,000.00
Minus:
 Allowable depreciation using Table A-1
(instead of section 179 deduction):
2014
.........................
$1,666.50
2015
.........................
2,222.50
2016 ($740.50 × 40% (business))
....
296.20
4,185.20
2016 — Recapture amount
...............
$ 814.80
Paul must include $814.80 in income for 2016.

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Then I'd follow your instruction to report it through Turbotax. I think this is right. TT isn't making this easy. :(