@markorec wrote:
Yes the program did not add regular depreciation the first year.
why does excess bonus depreciation from the limit not carry to year 2 and instead skip to year seven? I don’t see that explained anywhere in the depreciation instructions from the IRS. Can you point me to this weird rule?
I've been discussing this with a colleague, and the program may be right. I may have misunderstood/misremembered that the 'regular' depreciation from year 1 does not affect the Basis for years 2 through 6 are, so TurboTax might be right.
It is in IRS Publication 463. It won't let me post the direct link (this forum censors it because it thinks it contains a telephone number or social security number), but you can look for the subheading "Deductions in years after the recovery period". There are several paragraphs and an example, although it isn't particularly easy to read.
https://www.irs.gov/publications/p463#en_US_2023_publink100034033
In the Tax Code, it is in Section 280F(a)(1)(B):
(B) Disallowed deductions allowed for years after recovery period
(i) In generalExcept as provided in clause (ii), the unrecovered basis of any passenger automobile shall be treated as an expense for the 1st taxable year after the recovery period. Any excess of the unrecovered basis over the limitation of clause (ii) shall be treated as an expense in the succeeding taxable year.
The "Recovery Period" lasts six years (it is actually five years, but the first and last year are half-years, making it six tax years). It says the "Unrecovered Basis" goes to "after the recovery period" (year 7).
https://www.law.cornell.edu/uscode/text/26/280F
