Carl
Level 15

Investors & landlords

This is exactly why I do my best to avoid listing small rental assets separately. Things like washer's, dryers, A/C units, refrigerators, etc. *WILL* break in a relatively short time and create additional paperwork that can be avoided.

It's best, when you purchase a rental property, to just leave all that tiny stuff included in the original cost basis (your purchase price). If down the road you need to replace a small asset, then instead of capitalizing/depreciating it, use safe harbor de-minimus and expense it. That way, you're done with it. Forever.

When you have a depreciable asset break on you and it's time to throw it out, work through the asset in the Assets/Depreciation section and indicate that "I stopped using this asset in 20nn". In addtion to being asked for the date you stopped using it (or date of disposition) you'll also be presented a screen that asks "Special Handling Require?". You "MUST" click the YES button on this screen. If you click NO then you will be "FORCED" to enter sales information. If the item broke and you threw it out (as is usually the case with small appliances) then you did not sell it. So you must select YES on the "Special Handling Required?" screen.

 

Then, if the program is working correctly, any depreciation not already taken on that appliance will be included on line 19 of the SCH E. If it's not, then you can enter the amount of as-of-yet unclaimed depreciation yourself as an expense in the rental expenses section.

Take note that you will "NOT" under any circumstances and with no exceptions, delete this asset from your 2020 tax return. The asset should not be imported into your 2021 return next year. However, if the asset is imported next year into your 2021 tax return, that's usually for a reason. The number one reason being that the program incorrectly imported it. Next, it's because the tax filer did not correctly or completely report the disposition of the asset.