Turbo Tax Business incorrectly flags Qualified Improvement Property as not eligible for Special 100% Depreication Allowance

[user17701316428]

I’m receiving a validation error in TurboTax Business that appears to incorrectly disallow 100% bonus (special) depreciation on a properly classified Qualified Improvement Property (QIP).

Return and Asset Details

• Return type: Partnership (Form 1065 with Form 8825)
• Building type: Nonresidential (commercial office)
• Asset: Qualified Improvement Property — retrofit of an office suite (interior improvements only; no enlargement; no elevators/escalators; no internal structural framework)
• Recovery period: 15-year MACRS (QIP)
• Placed in service date: 09/01/2025
• Election: Special depreciation allowance (100%) for QIP
• Section 179: Not elected on this asset (also tested with and without §179 to isolate the issue)

Error Message

“This asset is not qualified property for the Special Depreciation Allowance. The 8825 worksheet fields for qualified property (100% & 50%) should be blank.”

Why this appears to be a software error

Under current IRS rules, QIP (defined in IRC §168(e)(6)) is 15‑year property and therefore eligible for bonus depreciation (special depreciation allowance). IRS Topic No. 704 explains that qualified real property—including Qualified Improvement Property—is eligible for the special depreciation allowance, and for property acquired and placed in service after January 19, 2025, the allowance is 100%. [ttlc.intuit.com]

Authoritative tax references further confirm that QIP consists of interior improvements to nonresidential real property placed in service after the building was first placed in service (excluding enlargements, elevators/escalators, and internal structural framework), that QIP is assigned a 15‑year MACRS life, and that QIP generally qualifies for 100% bonus when statutory requirements are met. [accountant...intuit.com], [ttlc.intuit.com]

Steps already attempted (issue persists)

1. Entered the asset specifically as Qualified Improvement Property with 15‑year MACRS life.
2. Confirmed the property is nonresidential and that the improvement meets QIP criteria (no enlargement/elevators/structural framework; interior retrofit only).
3. Deleted and re‑created the Asset Entry Worksheet, Form 4562, and the Depreciation Report, then re‑entered the asset from scratch.
4. Removed any §179 entries and re‑tested.
5. Rebuilt the Form 8825 activity and re‑linked the asset.

Despite these steps, TurboTax still produces the error that QIP is “not qualified property” for the special depreciation allowance.

Expected behavior

TurboTax should allow the 100% special depreciation allowance on properly classified QIP placed in service on 09/01/2025 (after Jan 19, 2025), calculating the allowance after any §179 (if elected) and before regular MACRS, as described in IRS Topic 704. [ttlc.intuit.com]

Request

• Please confirm whether this is a known issue and provide any available patch or update.
• If there is a specific entry path or override required in TurboTax Business to correctly recognize QIP for bonus depreciation on 09/01/2025, please provide step‑by‑step instructions.

[PatriciaV]

Yes, this experience has been reported for further investigation. We anticipate the more complex depreciation calculations within the software should be updated after February 13, 2026. These updates should include Special Depreciation carried over from prior years. Our tech team is working hard to release the updates before that date. 

[RegWA]

Also have same problem for a 5 year 200DB/HY asset placed in service 2/1/21. Special Depreciation allowance 100% taken in 2021.  -   this is first year with problem

[SuzyQ2222]

Also have same error with fully depreciated items (placed in service in 2010 and 2013), some that are 150DB/HY 15-year property, some that are 200DB/HY 5-year property and some that are 200DB/MQ 5-year property. All items took either 100% or 50% special depreciation allowance in the year placed in service. Some items have been fully depreciated for several years but are still in service. This issue has NEVER come up in the Federal Review in past years.

[user17709091896]

Hello.  When can I expect this issue to be fixed.  I have three separate business returns that I can't file until this is resolved.  I have LLC members that are waiting on K-1's.  Please advise the status of this software issue.

Thank you.

[CatinaT1]

We are hoping by this weekend, if not before. We don't have a specific date.

[user17701316428]

I have non residential / commercial real estate that was place in service in 2007.  Last year Turbo Tax Business allowed me to take the 100% / 50% Special Depreciation Allowance by checking that box within TurboTax.  However this year, it will not allow me to check that box.  Is this due to an error in last years TurboTax, or is the error in the current year Turbo tax? 

[wolfeshunt]

Initially, we were told 2/13.  It is now 2/14 and I haven't seen any fix.  This is not acceptable.  What is the procedure to escalate this issue so that it get's attention?

Thank you.

[SuzyQ2222]

There is an update today that fixes this issue. 

Unfortunately, now there is a different problem. When saving a PDF file with the Filing Option, TurboTax does not include the detailed list of expenses they now force us to put on Schedule A (Form 8825). Why did they even change the way expenses were entered?

[SuzyQ2222]

In fact, when reviewing the pdf file that is created by TurboTax, when I scroll to the page with Form 8825, Adobe Acrobat actually reports: "An error exists on this page. Acrobat may not display the page correctly. Please contact the person who created the PDF document to correct the problem."

So, Turbo Tax fixed one problem and introduced another. Par for the course.

[MonikaK1]

I've been advised today by management that the work on the depreciation section of TurboTax is continuing and expected to be completed with an update coming the evening of Thursday, February 19th.

@user17701316428 

@SuzyQ2222 

@wolfeshunt 

@user17709091896 

@RegWA 

[user17701316428]

This issue was not resolved with the 2/19 release.

I have non residential / commercial real estate that was place in service in 2007.  Last year Turbo Tax Business allowed me to take the 100% / 50% Special Depreciation Allowance by checking that box within TurboTax.  However this year, it will not allow me to check that box.  Is this due to an error in last years TurboTax, or is the error in the current year Turbo tax?  Please respond to this specific question.  

[jeriisan]

Anyone has issue printing/saving the tax return but form 8825 pages (2) are blanks??!! I installed the latest updates and called in and was told this is a known issue and it is safe to file the tax return. Just wanted to see if anyone else has this issue and if you have filed it yet. Thanks!

[user17701316428]

Can I please have someone from Turbo Tax respond to this question.  Thanks

[user17701316428]

Issues still are not fixed.  See other post for details.