You must report the recapture amount of a prior-year Section 179 deduction as income if any of the following occurred before the asset's recovery period (or useful lifespan as defined by the IRS) was up:
- You stopped using the asset in your business
- Business use of the asset fell below 50%
- You sold or otherwise disposed of the asset
- The asset was stolen or subject to a casualty
The amount you report as income is the portion of the deduction that would have remained had you used standard depreciation instead of Section 179. This is known as Section 179 recapture.
For more information, refer to IRS Publication 946, How to Depreciate Property.
Entering Section 179 assets or recapture
TurboTax Business easily calculates Section 179 deductions on assets acquired in the current tax year.
To enter a Section 179 recapture:
1. Open
(continue) your return if you don't already have it open.
2. Select
the Take me to my return button.
3. Inside
your program, search for “schedule C” and then select the "Jump
to" link in the search results.
4. Click Add expenses for this work
5. Select Assets and Continue at the bottom
For items that you are depreciating and
stopped using for your business (for any reason, including they no longer work),
you will indicate the change in use by editing the asset.
Go to the list of assets for your business
and edit the one that had a change in business use.
There will be a question that asks “Did You Stop Using This Asset in 2017?”
Answer Yes, and move forward to answer the follow-up
questions. The answers to the follow-up questions will generate the
proper forms needed to report any income or loss due to removing the asset from the
business.
TurboTax Business calculates the Section 179 recapture amount and records it on your Asset Entry Worksheet.
