Mid quarter straight line depreciation

[annmci]

I have multiple assets from a prior year with the majority purchased in the last quarter.  I am using straight line depreciation.  Because of that mid quarter conversion is required for each.  I don't see that as an option so current year depreciation is not correct.  Is there a way to get this to calculate correctly or to over ride?  TYIA.

[DianeW777]

It depends. If you started using straight line depreciation on these assets in 2024, then you would have a full year of depreciation in 2025. The straight line cannot be incorrect unless you have disposed of an asset or sold one. It's an equal amount of depreciation every month after the first year until disposed of.

Please update here if you have more questions about these assets.

[annmci]

Thanks for the quick response.

This is for 2025 depreciation of assets purchased in older years, for example 2022.  When a certain percentage of the cost of all depreciable assets for a year were purchased in the 4th quarter each asset has to be depreciated using mid quarter for the quarter they were purchased instead of mid year.  I saw in another thread that the depreciation section may not be fully operational yet, could that maybe be the issue or maybe I have to input all so the percentage will be clear or is TT business just not capable of this & I will have to override?

[MindyB]

As @DianeW777 says, the assets you are describing were placed in service in a prior year, thus there is no adjustment for mid-quarter convention. Mid-quarter convention will only yield a varied depreciation result in the first and last year of the asset's depreciable life.  The purpose of mid-quarter convention is to limit your first year of depreciation when you have a large percentage (40% or more) of assets placed int the last quarter. Then, in the final year you will recover the amount you couldn't take in the first year as compared to the half-year convention. No other adjustments are performed.

Here is an article that may help: What's MACRS and MACRS convention?

[AmeliesUncle]

I thought there was a question or checkbox or something that asked about it.  You may want to go through the questions for the assets again to see if you can find it.

If you can't find it, when it asks you for the category of the asset (office furniture, tools, etc.) , you can select 'other' (or whatever it is called), the 'other' again.   Then it should let you manually select the criteria, including Mid-Quarter convention in the 4th quarter.

Another option is using the "Forms" mode in the desktop version.  Find the "Asset Entry Wks" for that asset, then scroll WAY down to the bottom.  There should be a line that says "MACRS Convention" and probably says "HY", which you would need to change to "MQ".

[annmci]

I couldn't find any option for HY, MQ, etc.

I wasn't thinking it thru when I first asked so it isn't really an issue with at this point.  However, it is not calculating right.  1st year was 22. , mid quarter 2.  Cost was $65,150.  Total depreciation prior to 25 is $34,204.  25 depreciation should be $13,030 (20%) but TT is making it $12,378 (18.9%).  I don't like to override but it is looking like the only option?  Any other way to fix this?

[AmeliesUncle · Accepted solution]

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@annmci wrote:

25 depreciation should be $13,030 (20%) but TT is making it $12,378 (18.9%).  

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That is because your "prior depreciation" is based on the mid-quarter.  TurboTax is using Half-Year, so it thinks you used too much depreciation in the first year, and therefore too much "prior depreciation", which is why it is giving that odd result.

Have you tried both ways I suggested? (1) Changing the asset in the step-by-step interview to 'other' and then 'other' again to manually enter the criteria, and (2) accessing the Asset Entry Wks in the "Forms" mode?

[annmci]

Thanks.  That did it.  I have always used "other".  I finally found it via the forms method, almost all the way at the bottom.