I just remembered something here, and think I may see your confusion. I assume there is confusion because you've probably been playing around with the TurboTax Business program. If you haven't yet, then my bet is you will be confused when it comes time to enter your assets from the LLC into the TurboTax Business program for your S-Corp. So in the hopes of alleviating (or at least reducing) that confusion, Let me give you a realistic scenario that I'm confident will help you to understand just "how it works" here.
- You opened your single member LLC on Jan 1st, 2010 and on that date placed into service a depreciable asset that cost you $20,000. For the sake of simplicity, lets say that asset gets depreciated over 20 years at $1000 each year.
- Now lets say you "upgrade" your single member LLC to an S-Corp on July 1st, 2018. Therefore you will "close" the LLC on June 30th, 2018.
On the date you close your LLC your asset will have depreciated $7,500. So you remove that asset from the LLC for "personal use" on June 30th of 2018. Furthermore, you complete the process in TurboTax to file what will be your "final" SCH C for the single member LLC.
Now you fire up TurboTax Business to start your very first 1120-S corporate return for the S-Corp. One of the questions you will be asked by the program, is the date the business opened. This date "MUST" be Jan 1st, 2010, as that is the date "the business" opened as an LLC. Then in a separate question you will be asked for your "date of incorporation" (or date of S-Corp status) and you will enter July 1st, 2018. Now you continue working it through to the Business Assets section.
When you enter that asset into the Business Assets section of TurboTax Business for your 1120-s Corporate return, your "date placed in service" ***MUST*** be Jan 1st, 2010, because that "is" the date the asset was placed in service in "the business" before it was incorporated. Then the program will ask you for all prior depreciation already taken on that asset. It's important you enter the correct number here. Most get it wrong.
To get the correct number take a look at that form 4562 you printed out from the SCH C for that asset. You have to add together the numbers in the "prior deprecation" column and the "current depreciation" column to get the correct figure to enter into the TurboTax Business program for that asset.
So overall, that asset is still deprecated the full $1000 for the 2018 tax year. $500 of that depreciation is taken on the SCH C by the single member LLC you closed on Jun 30th, 2018, and the other $500 of depreciation is taken by the S-Corp that you opened on July 1st, 2018.
See how that works? If you don't do this right, then you will be taking significantly more depreciation than allowed or entitled to for 2018, and that *will* get your S-Corp audited pretty fast by the IRS.
