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How to handle equipment taken out of service, if taken section 178 when first put to use?


Equipment rendered inoperable after accidental drop when trying to relocate it within home office, i.e. no longer in use.
Item was put in use in 2016, 100% business use, section 178 deduction taken in 2016.
When I edit the item for no longer in use, TurboTax give me "Depreciation Deduction Amount is zero".
Do I need to go to Casualty or Theft under Other Deductions & Credits for the loss of my equipment?

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2 Replies
DanielV01
Expert Alumni

How to handle equipment taken out of service, if taken section 178 when first put to use?

It depends.  Usually if you have an item that has been expensed through Section 179, then, in the year that business use falls below 50%, or is disposed, you have Section 179 recapture.  If the asset has been carrying forward, and you need to report it as being disposed of, then review the asset and report that you sold or disposed the asset.  This will lead you through the section of the interview so that Section 179 recapture is calculated if there is any to claim.  

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How to handle equipment taken out of service, if taken section 178 when first put to use?

Thank you for your reply.

When I edit the asset it walk me through:

- did you stop using it? ans:yes

- disposition info: ans: date of disposition and date acquired

- special handling: answer yes if any of the following: Yes to asset was lost or destroyed due to casualty of theft

- next screen: depreciation deduction amount is zero

- taken back to business asset summary

Does it mean TurboTax determined that there is no recapturing necessary?

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