Yes you can do that and your second option. Don't know why you couldn't enter depreciation.
Do you have a loss on Schedule C? Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year.
Did you set up the assets? Did you add any new assets? Maybe you finished depreciating the assets the year before? Or said you sold the asset. Last year you must have answered a question wrong or checked a wrong box. I don't remember any problems with depreciation last last year.
