Depreciation discrepancy with my accountant

[kenkagan]

I file my taxes with TurboTax but I have an accountant prepare a Schedule C for my LLC (airplane leasing) and I use that to fill out my return. 2018 was the first year. In 2018 the asset was put in to service 8/10, used 70% in the business, Cost was 419,00, the basis was 293,997, recover period was 5.00, the method was 200 DBHY and the depreciation deduction was 58,799. Turbotax and the accountant Schedule C agreed.

In 2019 the business use dropped to 60%.

For 2019, the accountant’s 4562  listed the business percentage as 60%, the basis as 419,995, basis for depreciation as 251,997, the same recovery period and method, and a depreciation deduction of 80,639.

For 2019 Turbotax’s 4562 lists the business percentage as 60%, the basis as 419.955, basis for depreciation as 251,997, the same recovery and method, and a depreciation of 77,279.

I can’t see why the difference, I would like my return to agree with the account’s Schedule C.

Any suggestions?

[DavidD66]

Its impossible to reconcile the difference without being able to see what your accountant actually did, as well as your TurboTax depreciation reports.  I suggest you have your accountant reconcile the difference.  

[Carl]

So let me get this straight.

For 2018:

The cost basis of $419,000.00 is what you paid for the plane.

The depreciation basis of 251,997.00 reflects 60% business use. Not 70%. If it was 70% the depreciation basis would be $293,300.00. Check the math.

419,000 times .7 equals 293,300 which is "close enough" for 70% business use. Whereas 419,000 times .6 equals 251,400 which is what the depreciation basis would be for 60%. So you need to check that. Either you got your numbers wrong while typing your original post, or your CPA failed their math class. 🙂

[AmeliesUncle]

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@kenkagan wrote:

In 2019 the business use dropped to 60%.

For 2019, the accountant’s 4562  listed the business percentage as 60%, the basis as 419,995, basis for depreciation as 251,997, the same recovery period and method, and a depreciation deduction of 80,639.

For 2019 Turbotax’s 4562 lists the business percentage as 60%, the basis as 419.955, basis for depreciation as 251,997, the same recovery and method, and a depreciation of 77,279.

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The accountant is using the depreciation "tables".

TurboTax uses the mathematical way of calculating depreciation (without the "tables").

If the business percentage remained the same, both methods would have very similar results.  But when the business percentage changes, the mathematical method (without the "tables") changes things.

[kenkagan]

I’m sure I must not have presented it well. The 2018 return did show the cost as 419,995 and a depreciation basis of 293,997 which is 70% of the cost. In 2019 business use was 60%, and the same cost basis of 419.995 is entered on both the accountant’s forms and what I entered in Turbotax. The problem is that with the 60%, both showed the same basis for depreciation, 251,997. The problem is my account’s system generated 80,639 on line 26 (h) and TurboTax generated 77,279.

[kenkagan]

To add a little more context my account explained, "The MACRS rate for the second year is .32 and .32 multiplied by 251,997 is 80,636. Does Turbo Tax provide some sort of detail regarding the calculation? Can you override?"

[AmeliesUncle]

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@kenkagan wrote:

"The MACRS rate for the second year is .32 and .32 multiplied by 251,997 is 80,636.

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As I said above, the accountant is using the depreciation "tables".  TurboTax uses the method "without the tables".

[Critter]

Review the date you placed the asset in service for accuracy.

[kenkagan]

Is there a way to manually enter the depreciation so that it matches my accountant's values?

[DianeC958]

Yes,  if you purchase the desktop version of TurboTax you can switch to forms mode and change the depreciation entries to match the amounts you accountant has.  You may have to override entries to make them match, if you do override entries then you will need to print and mail your return.

@kenkagan