I started an LLC in 2019 & now need to add assets to depreciate which were converted personal assets; their useful life is < class normal; how can I do this in TT?

[Anonymous_]

Do you have a single-member LLC or multi-member LLC?

Are you converting assets to rental use or business use?

If this is a single-member LLC, you would add business assets in the Business Income and Expenses section under Assets Being Depreciated. If the assets are used in a rental real estate activity, you would add assets in Rental Property and Royalties section under Assets/Depreciation.

If this is a multi-member LLC, you would be filing a Form 1065, you would click the Start (or Update) button to the right of Business property/assets to add an asset used for business purposes and click the  Start (or Update) button to the right of Rental real estate dispositions to add an asset used in a rental real estate activity. Note that you have to use those two sections despite the fact that you are not disposing of an asset in order to add an asset.

[douglaslpa]

It's a 2-member LLC, Photography Business; assets include photo gear and computer equipment purchased over the past few years for personal use, which I will now be using for the business.  I was informed that I can convert these to business use at their current market value and useful life (e.g. Camera Body, purchased Jan 2017 for $3,000 w/current value of $1,500 and 3 years of useful life remaining a/o Jan 2019).  When I add this asset in TT, it automatically sets depreciation to 5-yr with no option to adjust for useful life of the converted asset.

[Anonymous]

you can not take into account the holding period prior to converting to business use.   

When you convert personal-use property to business use or to produce investment income, you're allowed to claim a deduction for depreciation.

What should the depreciable basis be for each piece of equipment?

IRS rules say, when you convert personal use property to business use, the value assigned to the property for depreciation purposes is:

The LESSER of...

the adjusted basis of the property, or
its fair market value
...on the date of conversion.

The adjusted basis of the property you purchased for personal use is generally what you originally paid for the property on the date of purchase. For example, if you bought a computer for personal use two years ago for $950, the adjusted basis of the computer is $950, your original cost.

Fair market value:

Tax rules do not consider transactions between related parties to be arm's length transactions.

How to Determine Fair Market Value:
To determine fair market value you could check the classifieds, eBay, and other places to find out what people are willing to pay for the type of equipment you have. If you recently purchased items close to the date of conversion, your cost will probably be the same as the market value.

Step 2:

Compare the adjusted basis of each item to its fair market value and use the lower value for its depreciable basis.

Once you know the depreciable basis of each piece of property, to compute the correct amount of depreciation you need to know three things:

What depreciation method you intend to use
The recovery period for each piece of property, and
the depreciation convention to be used.
Property converted from personal use to business use does not qualify for the first-year expensing deduction (also called the Section 179 deduction, which is the section of the Internal Revenue Code).

Related Party Transactions:
Property purchased from a related party does not qualify for the first-year expensing deduction.