2025 TurboTax Business calculating property depreciation over 26.5 years instead of 27.5

[_John__]

Updating question to note fiscal year:

Starting my 2025 LLC tax preparation and TurboTax Business is mis-calculating my rental's deprecations (unless someone can correct me here):

Asset Information:

Description: House

Purchase Date: 8/1/24

First-year expense decution: zero

Original amount to be depreciated when placed in service (excluding land): $705,930

Business use: 100%

Depreciation method: SL/MM

Fiscal year: ends 11/30

TurboTax calculation: 2025 deduction of $26,650, which is within a few dollars of depreciating over 26.5 years ($705,930 / 26.5).  TurboTax is projecting the same amount for 2026.

2024 taxes had the same cost basis and depreciation method ($7,487 for 3.5 months: mid Aug-Nov). I have been using straight-line depreciation for the same amount coming up with $25,670 ($705,930 / 27.5) for 2025.  Am I off here or how do I correct/override?

A better way of calc'ing the full year 2025 depreciation gets me to the same answer: ($705,930 - $7,487) / (27.5 * 12 - 3.5) * 12 = $25,670

[M-MTax]

Did you place this property into service in August of 2024? 

If so, then that would be 4.5 months, not 3.5 months. Do the math using that figure.

[AmeliesUncle]

If you go through the questions again, is there any chance you entered the wrong year or the wrong "prior depreciation?

Another possibility is that the current 2025 program is essentially still the 2024 program, which could cause errors (which could possibly explain why it is using 26.5 years).  If I double checked that the information I entered was correct, I wouldn't give the wrong amount another thought until the mid-January update.

[M-MTax]

@AmeliesUncle 

The wrong date (or time period) was used for 2024 depreciation. @_John__ stated that $7,487 was the depreciation deduction for 2024 for an asset that was placed in service in August. The correct figure should be $9626 and that will affect deductions going forward.

[AmeliesUncle]

---

@M-MTax wrote:

@AmeliesUncle 

The wrong date (or time period) was used for 2024 depreciation. @_John__ stated that $7,487 was the depreciation deduction for 2024 for an asset that was placed in service in August. The correct figure should be $9626 and that will affect deductions going forward.

---

Even if it was placed in service in August (although he said 3.5 months, which could mean it was placed in service in September), the less-than $2200 difference in the first year shouldn't account for the $1000-ish difference in depreciation for the following year.

I agree with you that an incorrect "prior depreciation" would incorrectly alter the current and future year depreciation, but the specific numbers in this case still would not make sense.  While your comment could be a factor, I think there is more to it than only that.

[M-MTax]

---

@AmeliesUncle wrote:

While your comment could be a factor, I think there is more to it than only that.

---

I understand, but then you and I (I believe) are aware of how TurboTax can wildly mess up the figures based on past input. For example, I recall a test return I did where the current year deduction would be way off and variable every single time past depreciation was changed. Crazy stuff.

[_John__]

@M-MTax @AmeliesUncle 

Good catch that I left out an important detail for 2024 that my fiscal year ends with November as opposed the the typical calendar year.  That's how 2024 came in with 3.5 months of depreciation.

I'm working on 2025 now (again, because the fiscal year ends earlier.)  It's in the 2025 version of business tax that I'm not getting the correct depreciation.  Thank you

[_John__]

Yes, I triple checked the information and agree that waiting for an update will be helpful.

[M-MTax]

@_John__ 

Perhaps a dumb question, but are you certain you chose your (correct) fiscal year and not a calendar year? I'm not sure but I believe the program defaults to the latter.

Also, can you go into Forms View and look at your Asset Entry Worksheet (or whatever it is called in TT Business)? The recovery period should appear on that form or one similar to it.

[VolvoGirl]

@M-MTax  Isn’t there something about using the prior year program to file a return that has a different fiscal year end?   So they need to use the 2024 program to file for Nov 30?  Or is that only for short years or 1041 Trust returns?   

[M-MTax]

You're correct, @VolvoGirl., and this is getting more intriguing since @_John__ 's LLC current fiscal year doesn't end until 11/30/2025 (that's next week and that return wouldn't be due until February).

The 2024 Form 1065 can be used for fiscal years that begin in 2024 and end in 2025, that part is clear. What is NOT clear is why @_John__ is using 2025 TurboTax Business to file a fiscal year 2026 1065 that won't be due until after November 30, 2026 (now thinking a mistake has been made).

If @_John__ is preparing a 2025 fiscal year 1065, the wrong product is being used (it should be the 2024 edition of TurboTax Business).

[VolvoGirl]

Then depending on when he started the LLC he may have been filing every year the wrong way?

[M-MTax]

---

@VolvoGirl wrote:

Then depending on when he started the LLC he may have been filing every year the wrong way?

---

I suppose we have no real way of knowing. 

However, @_John__ wrote, "Starting my 2025 LLC tax preparation and TurboTax Business...". If, by that, @_John__ means he's starting his 2025 fiscal year return (i.e., the one due in February), he's using the wrong edition of TurboTax Business (should be using 2024 TT Business). If the return being currently prepared by @_John__ is for the 2026 fiscal year, that thing is way early as that 2026 fiscal year return isn't due until February of 2027.

[AmeliesUncle]

And that isn't even going into asking if choosing a Fiscal Year was allowable for his situation or not ....

[M-MTax]

---

@AmeliesUncle wrote:

And that isn't even going into asking if choosing a Fiscal Year was allowable for his situation or not ....

---

That's true and a good point. Also, perhaps asking if this, in fact, is a multi-member LLC.