Depreciation for a piano

[hntrust]

A piano was purchased in 2011 while a student. In 2014 I began performing as a self employed concert pianist. I use the piano to practice exclusively in my home office. Depreciation was never taken. Can it be depreciated starting for 2019 and how do that in TurboTax?

[MarilynG1]

In the Self Employment section, you can set up the Piano as a Business Asset and claim depreciation on it from the date you first started using it for business. 

You will have several choices of your Method of Depreciation to use.

Click this link for detailed info on Depreciation of Business Assets.

This link gives info on calculating the Cost Basis of a Business Asset.

As far as taking an additional expense deduction for a Home Office, unless you actually earn income from your Home Office (give piano lessons, for example), you may not want to claim this deduction.

Click this link for detailed info on Taking the Home Office Deduction. 

[hntrust]

I do give lessons at home so I have taken the home office deduction. Do I have to file amended returns since 2019 is the first year I will depreciate the piano even though it was put in service in 2014?

[MarilynG1]

You could amend your returns to take the piano depreciation for the past three years only, if you want to.  You are not required to. 

When you stop using the piano for business, the IRS will calculate any depreciation that occurred since you started using it for business, whether you claimed it or not. 

Click this link for more info on How to Amend a Prior Year Return. 

[hntrust]

Why doesn't TurboTax generate form 4562 to be sent to the IRS? TurboTax calculated how much depreciation I could take this year and entered it on schedule C but didn't create form 4562. Is that because I did not claim depreciation beginning in the year that the piano was put in service as a business asset? If I don't file amended returns for the past 3 years to claim the depreciation will the IRS still recapture the depreciation I never claimed and will I have to pay tax in the future on the unclaimed depreciation?

[ThomasM125]

The form 4562 should only be filed in the year you purchase the asset and set it up for depreciation.

If you sell the piano, you will have to subtract the depreciation allowed over the years from the cost to determine the adjusted basis of the asset. You will then net the sale amount with the adjusted basis to determine the gain or loss on sale of the asset.

Since there is depreciation you never deducted and got a tax benefit for, you may end up with an adverse consequence if you sell the asset one day. 

[AmeliesUncle]

You really need to go to a tax professional to file Form 3115 with your tax return.   You are NOT allowed to amend, but in order to 'catch up' with the depreciation you can file Form 3115.  Make sure the tax professional knows how to do that with Form 3115, because many don't know how to do it.

[ThomasM125]

Here is a thread on the form 3115 "change in depreciation method" to report missed depreciation in prior years:

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/if-i-ve-had-a-residen...

[LeonardS]

This post by @Hal_Al "...Technically, you are not required to claim it. But you are required to "recapture" depreciation allowed or allowable when you sell the property, in the future. That is, you will pay tax on the depreciation, when you sell, whether or not you actually claim it"  provides a less complex way to account for your depreciation.