How to enter Depreciation for business EQUIPMENT / machines in TT Home & Business 2020- Desktop

[davekro]

How do you enter the asset EQUIPMENT information (Description, Date in Service, Cost, Basis, Method, Prior & Current deprec.)  for prior year -and- current year EQUIPMENT in TurboTax Home & Business 2020 DESKTOP on a MAC? Yes, it is late 2023 and I am just now filing for the 2020 tax year. I’ll be doing 2021 & 2022 w/ TurboTax as soon as I figure out this depreciation issue in TT 2020. I have overpaid all my prior year pre-payments, but did not file... until now. In two + days of Googling this, I have found no answers for "equipment" depreciation. I'm very frustrated, so I searched for a TT forum, and here I am. ;o)

If there is no way to do this in TT Home & Business '20, '21, & '22, what can I do as a workaround?

Thank you, I really appreciate any assistance if there is a way to do this.

[VolvoGirl]

You enter it under Business Assets.  Click on the Business tab, then under Business Income & Expenses scroll down to Business Assets.

[VolvoGirl]

I should have added.....You add them as new assets and enter the date  you bought it.  It will take you though entering the prior depreciation.  If you can't find the right screens I can make you more screen shots from my 2020 windows Home & Business program.  

[davekro]

Volvo Girl,

Thanks for how to find where to enter current and prior depreciation. As I studied my 2019 Depreciation report (attached) as well as ’16 & ’18, I can see that most of my equipment each year was taken as ‘Sched 179’ or ‘Special Deprec. Allowance, so deducted the year purchased. The (9) lines of equipment depreciated in 2014, was all used up by 2019. [Reminder: My questions in this thread relate to my very late filing of my 2020 tax return.]

Correct me if I am wrong, but since I plan to retire and sell my business in 2024 and all equipment with it, there is no need to enter all that prior cost basis/ deprec. into my 2020 TurboTax software history. I will not be selling the equipment off individually, so do not need to associate prior cost basis, etc.

The only two current Depreciation carrying forward items into my 2021, 22, 23 & 24 returns will be:

• The ‘Home Office’ percentage of $1907/ year. This seems to be covered in the Home Office Section.
• ‘Home Office Loan Costs’. This $25/ year has been listed by my prior tax guy in Form 4560 line 16 (Other deprec. incl. ACRS) for the prior 10 years.  (2 screen shots attached)

Not a big deal at $25/ year at all, but the questions at [ Bus. Assets > Bus. Tab > Bus. Inc. & Exp’s. > scroll to Bus. Assets ] do not fit this item. My 10 yr tax guy had the Method of Depr. as 30 yr, SL/NA… not an option in the Bus. Asset section of TTx.

Any thoughts where this $25 amount Prior Year Deprec. Report (2019)Prior returns use 30yr, SL/NAQ's don't apply to Hm.Off. Loan Costsmight go. Asking more for consistency to prior yrs, not the small $25 amount. ;o)

I really appreciate your earlier help and any thoughts on the above.

[DianeW777]

Your questions and answers are as follows:

• Correct me if I am wrong, but since I plan to retire and sell my business in 2024 and all equipment with it, there is no need to enter all that prior cost basis/ deprec. into my 2020 TurboTax software history. I will not be selling the equipment off individually, so do not need to associate prior cost basis, etc.
  • Any asset that is fully depreciated does not need to be entered on your 2020 return, however you will need to account for them ii the sale.  Each will have a zero cost basis but will have a selling price assigned to it.  The selling price and selling expenses must be prorated for each asset that is part of the sale.  You can prepare for that now by figuring out the percentage of each asset.
• The only two current Depreciation carrying forward items into my 2021, 22, 23 & 24 returns will be:
  • If the home office is the only depreciable asset at this time, then yes, you will complete that in the home office section.
  • As far as the loan cost you can enter that under 'Other' expenses and use the label of 'Amortization of Loan Cost' or use the steps below which will carry it to the same location:

1. Sign into your TurboTax Account > Search (upper right) > Type rentals > Press enter > Click on the Jump to .... Link
2. Edit beside the rental you want to work on > Scroll to Assets > Edit
3. Select Yes to go directly to the asset summary >
4. Add or Edit the asset for the loan refinance costs > Select Intangibles, Other Property > Continue
5. Select Amortizable intangibles > Continue > Enter the details about your costs including the refinance date
6. Continue > Select the Code Section 163 for loan fees > Enter the useful life (number of months of the loan)
7. The final screen will show the deduction.  

@davekro 

[davekro]

How much of a problem have I caused by filing ’20 & ’21 TT Federal returns w/o entering federal fully depreciated business equipment?

My 2019 and back twenty + years taxes were done by an EA. I have been doing ’20 and forward w/ TT. The State ’20 return is being done manually from downloaded forms.

On 12/31/24, I mailed my paper 2021 & 2022 Federal returns created in TT H & Bus. desktop. I did not take the time to enter the 32-line items of fully FEDERAL depreciated coffee equipment items into those returns. Now as I’m preparing  my ’20 & ’21 Calif. State returns I see/ realized from my 2019 CA STATE return that since California does not use some of the accelerated depreciation that the Fed uses, it seems I may have some amounts of ‘put in service in prior years’ depreciation available to expense in 2020 for State. I don’t know about for 2021.

I put no new equipment was put in service in ‘20 or ‘21, so no Fed or State ‘current year’ deprec. (accelerated or otherwise) for these two years.

My questions:

• How much of a problem have I caused by filing ’20 & ’21 TT Federal returns w/o entering federal fully depreciated business equipment?
• Is amending the Federal, especially older than 3 years,  say ’20 & ’21 returns to fill in depreciation (history at this point) something that can be done? Should I immediately file an amended return for ’20 & ’21, which would be mailed ≈ 10 days after the originals were mailed on 12/31/24?
• Should I just add the 32 assets w/ their dates, amounts, etc. when I get to my 2022 Federal return in the next day or two and leave ’20 & ’21 as is w/o deprec. info?
• For State Returns, do the attached 3885A’s from ’18 & ’19 give any clue as to what amounts I might use in lines 6, 7, 8a or 8b for 2020 or 2021 3885A’s? (If it helps, my 2019 Deprec. & Amort Report showing all the history, is in my 10/31/23 post above.)
• If yes, would it cause a problem that the State 2020 (and maybe 2021) 3885A(s) would reflect available prior State deprec., when the 2020 & 2021 Federal returns show: a) no Sched C (13) deprec. b) no form 4562 Deprec. & Amort. form filed.
• –OR– Is it better to just forget about whatever State prior year(s) deprec. might have been, so as not to raise a red flag to the State FTB or IRS? While I like the idea of some continuity for the state returns, even if  amounts are guesses, I really am not concerned about missing out on a few thousand in CA deprec, deductions… IF that is less likely to cause a red flag, kick back or other problem.
• If I do not amend ’20 & ‘21 Fed Returns, and 2019 remains the last year that has the basis and history information on my bus. assets, when I retire and sell my business, will that cause a problem when a smaller part of a sale price would be for all the used equipment. Most of the price would be from the value of the gross sales/ revenue as well as the profit margins the business generates.

Thank you in advance for any insights. I truly appreciate the help this community has already given me.

Dave

'18 to '21CA 3885A Depr. & Amort. Report

[davekro]

Any ideas on the above added inquiry if/ when you have time @VolvoGirl  @DianeW777  @xmasbaby0  @SteamTrain 

Thank you community.

Dave

[davekro]

All my returns for state and federal '20 through '23 are in the mail.

Thank you all for your help!

Dave