Section 179 depreciation and/or special depreciation allowance

Forum|Forum|5 years ago
March 13, 2021
2 replies
3 views

I have read multiple responses to questions on this topic but I am still confused. I have rentals that are considered a business even without using the special harbor. I bought a vehicle in 2020 and placed it in service. It is used greater than 50% for the rentals. I go through the schedule e questions on vehicle costs where it lets me add the vehicle, its in service, the miles to show above 50%, answer yes if used by a person who owns > 5% business, the other questions on if I use it for like UBER work (which I don't) until I get to the page which asks how much of the section 179 depreciation I want to take and if I want to take the special depreciation deduction. I believe under section 179 I should be able to take 100% of the vehicle cost. But, if I add the vehicle amount to the section 179 box and choose the special depreciation, I get less of a rebate than if I choose the special depreciation. The special depreciation only allows up to the positive income I earned on the rentals. I've tried different variations but Turbotax seems to not like this as at times it won't get me back to the page with the section 179 box and the question on choosing the special depreciation. Is there a bug in this section of Turbotax? In addition, Turbo tax is saying I'm electing OUT of the Qualified Economic Stimulus Property which is NOT what I want. Appreciate any help here. Also would ask TurboTax to redo this section to make it more straightforward. It shouldn't be this difficult, especially since TurboTax mantra is to save you maximum money on your taxes!!!! I've had more issues this year with TurboTax than ever. I couldn't even get my disc to download right and had to go to the website to get it downloaded.

DianeW777

Level 15

Your question: I believe under section 179 I should be able to take 100% of the vehicle cost.

That is incorrect. If you are using the vehicle greater than 50% for business use, then you can take the business use percentage of the vehicle as a Section 179 expense. However, vehicles have special rules and overall limits for depreciation.
- Depreciation Limits: Placed in service during calendar year 2020, the depreciation limit under Sec. 280F(d)(7) is $18,100 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year, all unchanged from 2019. (Publication 463 has not been updated for 2020 so the link takes you to the 2019 version)

Special depreciation and Section 179 are two different options to choose from. Both would allow only the business use percentage and only because it is used greater than 50% for business.

Once you select that you want to use 'actual expenses' then the Section 179 question will come up. Read the screen carefully, because it should show you the maximum amount allowed.

Go back to select your vehicle and when you select 'Edit' you will go through each screen again to reach the Section 179. Enter your amount and select 'I don't want to take the special depreciation allowance (you can't do both). See the image below.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

R117

Level 2

I'm having the same problem, and the answer you were given doesn't help.

JamesG1

Level 15

There are two issues which might be affecting the section 179 deduction on your tax return. Both are discussed in this IRS publication.

Page 3 Line 5

If you are married filing separately, you and your spouse must allocate the dollar limitation for the tax year.

Page 4 Line 11

The total cost you can deduct is limited to your taxable income from the active conduct of a trade or business during the year. You are considered to actively conduct a trade or business only if you meaningfully participate in its management or operations. A mere passive investor is not considered to actively conduct a trade or business.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"