This turns out to be more complicated than I thought. Here is what I've done (need clarifications on some questions)
1) Business Expenses / Home Office Expense / Home Office Asset Summary section
I already had my home added here from previous years so depreciation has been in effect.
I've added "Finished Basement" as the second asset here in addition to my home.
For Finished Basement: I chose "An improvement to your home",
For "cost": I put 1/6 of the total basement cost,
For "date purchased or acquired": I put the date I started using my new home office,
For "Have you used this item 100% for this business since you acquired it?", I chose "yes"
For "business use percentage": I put 100%
2) Business Assets / Assets being depreciated
For "Did you buy any items for any business, rental property and/or farm that cost $2,500 or less in 2021?", I said "Yes"
For "Did you make improvements to a building you used for this business in 2021?, I said "yes"
For "cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits $10,000 or 2% of the adjusted basis of your building", I said "yes" (1/6 of the cost is around $6k)
For "do you want to take this annual election", I said "yes"
Then I created new business asset as follows:
For "describe this asset", I chose "Real Estate Property" with the start date I put for "Date Purchase or acquired"
For "how would you categorize this asset?", I chose "qualified improvement property". The other options were "nonresidential real estate" and "specific qualified improvements"
For "describe the qualified improvement property", I put "finished basement". I also put the cost and date purchased/acquired.
For "How do you want to deduct this item?", I chose "I'll deduct the full value of the item this year. (take the section 179 deduction)"
Then Turbotax auto populated the Virginia Section 179 expense for me with 1/6 of the total cost.
Does this look correct?
