TT 2018 Warning: TT still refuses to prorate rental property depreciation, forces override cancelation before e-filing. Major defects.

[guyshomenet]

According to my tax attorney, when two unmarried people own a rental property, the annual depreciation is to be prorated between them.

TT has always forces the full depreciation on the filer using TT.

In the past you could override the field for the shared depreciation and enter the correct amount. You can do that for 2018 as well.

HOWEVER, when you try to file electronically, TT refuses to do so unless you cancel the override. Hence, a compounded product defect.

[Rick19744]

Why is that a defect?  If TT stands behind their computations how can they then allow someone to override something and still be held to that same standard.  Makes no sense.
There is no defect, you just can't efile.  You can still prepare the tax return, you can still mail it in, so not sure the issue other than you want to OVERRIDE TT's policy.  That is not a defect.
A simple option here is to split the cost basis between the two returns and then you have TT compute the depreciation accordingly AND then you could efile.

[guyshomenet]

Why? As I stated before, a tax attorney has told me this is an inappropriate calculation (strike one). That TT disallows me to file electronically with the correct data is a huge defect (strike two).

Snail mail? Please .....

[Zbucklyo]

Turbotax does not force the full depreciation on the person using Turbotax.  All you have to do is effectively split the rental property in two, and act as though you own 100% of it.  

[guyshomenet]

It does if you want to e-file (it didn't last year, but it does this year).

[Zbucklyo]

Then file your tax return with the attorney, if he can override the supposedly incorrect depreciation amount.  Don't use what you believe is a defective product.  You can probably get a refund for calling customer support.

[guyshomenet]

Would prefer that TT fix their defects.

Aside from the hour+ I have spent on the phone with them, using the community forum to alert others to the defect is important. This also add the problem's visibility to TT engineers or service reps who scan these pages.

[Rick19744]

Apparently you have not read the responses.  There is no defect.
As stated above, split the property in two, report 1/2 on each return and then depreciation will be handled correctly AND then you can efile.
Very simple and the correct way to handle it.
Try some other software and see if you can do what you want to do there.  The answer will be no; same result as you get here.

[guyshomenet]

I have read the responses, and they do not address the paired defects (there are two). It is the combination of the defects that makes it critical.

a) In TT, you declare your percent of ownership. TT then prorates everything except depreciation correctly (defect #1).

b) You can override TT's failure to prorate depreciation.

c) But you cannot e-file with the override (defect #2).

Because TT automates and correctly calculates all the other prorations aside from depreciation, then it dropping the ball there is clearly a defect. That it disallows me to file a correct override of their defective non-calculation is the second defect.

[guyshomenet]

News: TT admits to one of the two defects.

Just got off the phone with TT support (1.5+ hours). Got to tier-2 support.

They agree that not prorating depreciation is a defect. However, they claim that blocking e-filing of returns with an override is policy.

Fair enough. If they fix the proration problem, then the e-filing would be good.

[TaxGuyBill · Accepted solution]

The program is correct.

When you tell the program you only own 50%, it gives you the option to let the program so the math (you enter 100% and then it multiplies it by 50%) or if you want to enter YOUR income and expenses (you enter 50% of the total).

The "Learn More" link clearly tells you this only pertains to expenses, and that YOU need to only enter YOUR reduced 50% of the Basis for assets for depreciation.  So if the home cost $100,000, you would enter that it cost YOU $50,000.

When you do that, there is no reason to override.

[guyshomenet]

Depreciation is an expense. It is supposed to be prorated.

Spent 1.5+ hours on the phone with TT Tier-2 support and they confirmed the depreciation calc is not correct ... that depreciation expense needs to be prorated like all other expenses.

[TaxGuyBill]

Seriously?  Did you not look at the picture I posted above?  It VERY CLEARLY tells you that you need to reduced Basis for depreciation based on ownership percentage.

It is not an error in the program if you don't read the instructions it gives you.

[guyshomenet]

1) My tax lawyer agrees depreciation expense needs to be prorated

2) TT's tier-2 support agrees the software has a defect and it should prorate it.

Reading your screenshot this harkens back to previous versions of the software where (a) you could override the non-prorating of depreciation and (b) e-file. In TT-2018 if you override to take the appropriate prorated depreciation, you cannot e-file. This is the aspect you appear to have not noticed in my original post.

[TaxGuyBill]

You must not be understanding the directions the program is telling you.

It tells you to reduce your Basis by your ownership percentage.  So if the full cost of the property is $100,000, you would then enter $50,000 as the cost of the property.  When you enter $50,000, the program will properly calculate depreciation, and there is no need to override anything.