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dirt_mangurt
Returning Member

Improperly categorized depreciable assets

I'm switching from an accountant to TurboTax this year and just realized my previous accountants (2 different people over the previous 4 years) miscategorized some assets.  I have camera equipment and camera accessories that I both use and rent out.  One accountant started depreciating my equipment as furniture/fixtures, which is 7 years so same as video equipment.  Maybe no big deal.  The other accountant started depreciating newer assets I purchased as machinery/equipment, which is a 5 year schedule and would change the math if I switched categories so obviously a bigger deal.  Can I switch everything to the proper category or do I just continue each item as it was started, knowing that the category is wrong? 

 

FYI - sole proprieter 1040 Sch C

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Accepted Solutions

Improperly categorized depreciable assets

did your prior accountants fully depreciate the assets by taking either section 179 and/or bonus/special depreciation? this would have resulted in expensing (fully depreciating) the entire cost in the year they were put into service. if so, the wrong lives would not matter because there is nothing left to depreciate. 

 

if they didn't you can not just change their lives.  technically you would be required to file form 3115 to correct these errors. this is probably something that you would need a pro to do so it's done correctly. this would be the proper thing to do. however. if not a lot of $$$'s are involved I would think twice about going that route and just leave things as they are. 

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3 Replies

Improperly categorized depreciable assets

did your prior accountants fully depreciate the assets by taking either section 179 and/or bonus/special depreciation? this would have resulted in expensing (fully depreciating) the entire cost in the year they were put into service. if so, the wrong lives would not matter because there is nothing left to depreciate. 

 

if they didn't you can not just change their lives.  technically you would be required to file form 3115 to correct these errors. this is probably something that you would need a pro to do so it's done correctly. this would be the proper thing to do. however. if not a lot of $$$'s are involved I would think twice about going that route and just leave things as they are. 

dirt_mangurt
Returning Member

Improperly categorized depreciable assets

They all have life left but only one more year for the incorrect 5 year assets. The accountant took 50% of the value the first year as 179/bonus/special.  The biggest current depreciation for the upcoming return is $1,159 under the 5 year schedule. The rest are all under $300.  Sounds like continuing as is will be the way to go and shouldn't ruffle any IRS feathers.  Thanks!

Improperly categorized depreciable assets

Correct ... better to not "rock the boat".

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