2nd Year Depreciation after 1st Year Full Special Depreciation Allowance Taken

[coxpaul1]

TurboTax is calculating a $14,196 depreciation expense to be taken in 2021, but I fully depreciated the >6,000lb SUV in 2020.  I took that Special Depreciation Allowance in 2020 on Form 4562, Part V, line 25 as $37,274 (99.42% business use of a $37,488 purchase basis).  This amount transferred to Schedule C, Part II Expenses, line 13.  All seemed fine.  Fast forward a year, and I'm doing my 2021 taxes, expecting no depreciation to be taken (just a few thousand dollars in fuel, oil, etc. expenses).  I don't understand how/why it is now figuring MORE depreciation expense ($14,196) to be taken in 2021.  The SUV was fully depreciated in 2020. I took that expense in 2020 when there was much more income than the expense (the depreciation expense did not reduce my 2020 business income to anywhere near zero). This makes no sense to AGAIN write off depreciation on a vehicle that was fully depreciated the first year, and I don't know how to fix it.

[KrisD15]

The depreciation should have carried forward, but I did have a situation where the depreciation was not updated after I uploaded a prior year PDF using Desktop. 

Please go into your Schedule C

(Business, Business Income and Expenses, Edit next to the Business name)

Scroll down to 'Business Vehicle Expenses" under "Business Expenses"

Select EDIT for the vehicle

Go through the interview and add the prior Section 179 and Special/ Bonus depreciation taken on the vehicle.

[coxpaul1]

Thank you, but that doesn't work.  I did as you suggested, and working on the vehicle expenses, when I get to the Depreciation screen, TurboTax states

"Depreciation
2018 Jeep Grand Cherokee Overland

Because you transferred this vehicle from your 2020 return we have enough information to calculated your 2021 federal depreciation."

The only buttons available are Back or Continue. 

I press Continue, and the next screen says my actual vehicle expenses are $16,598.  That is $2,402 in business portion of gas, oil, etc. PLUS $14,196 depreciation!

I am never prompted to make any adjustment to the depreciation, and I wouldn't know how or where to do this on the forms themselves.  I have no idea why it says it is pulling the information from last year's return, yet doesn't seem to know that I fully depreciated it in that prior year (2020).

[PatriciaV]

Please clarify what version of TurboTax you are using. This will affect your solution.

[coxpaul1]

Interesting.  I had to list that information when I first posted, but it doesn't appear anywhere obvious in this exchange.  Anyway, I am using TurboTax Home and Business 2021 for Mac.

[PatriciaV]

You have two options: 1) delete the vehicle and re-enter using information from your prior year return or 2) make manual entries to the Car & Truck Worksheet. The first option is fairly easy to accomplish from your Schedule C Vehicle Expense entries.

To manually adjust the prior depreciation on this vehicle in TurboTax Home & Business:

1. Open your return and click the Forms icon in the upper right side of the TurboTax header.
2. Look in the left column under Schedule C for your business and click on "Car & Truck Wks" for this vehicle.
3. In the large window, scroll down to Part VI. Review each line item for accuracy.
   > If you have questions about what to enter, right click the entry box and choose "About." If the number is black, click "Data Source" to show where the number originated.
   > Note that you may change only numbers in blue (current year entries) or green (imported from last year).
   > When you hover over a field, if it turns blue you can make an entry.
   > If your entry turns red, click the Errors icon above the left column to display the error below the form.
   > Line 34 Section 179 and Lines 36i & 36j Special Depreciation are current year deductions only.
   > Prior depreciation begins on Line 37.
4. To review the outcome, open the Depr Report from the left column. This displays both prior and current depreciation info.
5. To go back to your return, click the Step-by-Step icon in the header.

[coxpaul1]

Thank you.  I will try this manual line-by-line adjustment to the 2021 tax year vehicle info.  Am I correct that my basis is now $0.00? I deducted all I could the first year, based on my 99.42% business use.  So there are a couple hundred dollars I did NOT deduct that first year (2020).

[PatriciaV]

Yes, if your current year depreciation plus your prior depreciation are equal to the cost of the vehicle, your adjusted basis is zero. However, if you continue to have less than 100% business use, there will always be a small amount of basis left for the "non-business" portion of the vehicle.