TurboTax elects OUT of Special Depreciation Allowance by default?

[ericbroder]

I have an equipment leasing  business, so all of my assets are capital assets subject to depreciation.  I didn't notice it last year, but this year I noted that TurboTax seems to elect NOT to take the Special Depreciation Allowance by default.  Granted, the economics of this business (at least in these early years) results in a "normal" (200% declining balance) depreciation amount in excess of my lease income, and electing the Special Depreciation Allowance would exaggerate that further.  And I did not find that there is a restriction limiting it to net profit as there is with Section 179.  But is it right that TurboTax defaults to elect not to take it?  

[MarilynG1]

You can only take the Special Depreciation Allowance in the year you started using the asset for Business.

Click this link for a detailed article on Depreciation of Business Assets.

[ericbroder]

Thanks for the reply...

Right, but the assets purchased in 2019 were being defaulted to a YES check in the box for "Elect OUT..." on the Asset Entry Worksheet.  My question is why would TurboTax do that?

[MarilynG1]

This post may answer your question.

[ericbroder]

Thanks, but, not really.

All of my 2019 acquisitions were marked to elect out.  Now, if opting out of prior years' acquisitions means that I've opted out of future year's acquisitions of the same asset class, then that would make sense.  But it's my impression that each year's acquisitions stands on its own, as long as all assets of that asset class follow the same election.

[PhilPhilPhil333]

Hello. Did you ever resolve your issue? I am dealing with the same thing: Under 'Federal Taxes' > 'Other' > 'Election Forms', TurboTax Business doesn't seem to be allowing me to deselect/uncheck the 'Election to Not Claim Special Depreciation'. How did you navigate through this scenario? Thanks.

[ericbroder]

I did get it to work, but can't remember how.  I just re-opened TurboTax and stepped through one of my assets and took screen shots of each step along the way.  I can send them to you if you provide an email address (there are 11 of them and I don't think I can upload all of them to this forum).

[PhilPhilPhil333]

Thank you for your quick response! I ended up learning that since my rental real estate property is on my return, I can't pick and choose parts to apply to special depreciation - at least that's what I believe is what was getting me stuck. It would be nice to be alerted in the software upon entry, but I had to figure it out on my own. Thanks! 

[Carl]

rental real estate property is on my return

Long term RESIDENTIAL rental real estate is not eligible for SEC179 at all. However, some assets that are "NOT" classified as residential rental real estate may be eligible for the Special Depreciation Allowance. (SDA).

This is not true for *COMMERCIAL* rental real estate.

[yratencio]

Plz send me your 11 screen shots on how you were able to correct the Opt out of SDA to [email address removed]. thank you.

[yratencio]

Plz send me your screen shots to [email address removed], thank you. 

[JamesG1]

The special depreciation allowance or bonus depreciation rules allow for 100% bonus "expensing" of assets that are new or used. 

If the asset qualifies for the special depreciation allowance or bonus depreciation, you will be given that option as you establish the asset in the Asset Summary.

In TurboTax Online Self-Employed, follow these steps.

• Click on Federal down the left hand side of the screen.
• Click on Income & Expenses across the top of the screen.
• Under Your income and expenses you will find Self-employment income and expenses.
• Click on Edit / Add to the right.
• Click on Edit to the right of the activity at the screen Your 2020 self-employed work summary.

Add an asset and answer the various questions about the asset costs, dates and use.

• If the asset qualifies for the special depreciation allowance, click the option I'll take the 100% special depreciation allowance at the screen How do you want to deduct this item?
• At the screen Asset Summary, click Show Details.  You will see the notation special depreciation allowance at the bottom of the screen.

@yratencio