A new HVAC system for a property rental business was purchased for $40,000, placed in service in 2023, and bonus/ special depreciation and regular depreciation was expensed in 2023. In 2024, a $10,000 energy efficiency rebate was received. According to IRS guidance, energy efficiency rebates should adjust the cost basis of the asset. The rental business income and expenses will be reported on Schedule E. How do I enter this adjust the cost basis for this asset in Turbotax so that the depreciation recapture is calculated correctly for both bonus/ special and regular depreciation?
Details:
Cost basis: $40,000
1st year bonus/ special depreciation @80%: $32000
1st year regular depreciation (200DB/ mid quarter convention) @5%: $400
Remaining basis at end of 2023: $7600
Section 179 deduction: 0
