I recently 1031-exchanged a condo I owned for 20 years. I have been renting it since 2009.
I am trying to figure out the total depreciation I have claimed over the years, but the 2019 Form 4562 report shows prior depreciation as zero. I went back and looked at my taxes a few years back and all of them show the prior depreciation as zero.
Is there a scenario where my depreciation was not allowed? or something else could be wrong?
I have been using TurboTax online all along.
Thanks in advance!
First, make sure you're looking at the correct 4652. There are two of those for each rental property and both print in landscape format. One is titled "Depreciation and Amortization Report" and this one is most likely the one you want. The other is titled "Alternative Minimum Tax Depreciation" and most likely will show all zeros in the depreciation columns.
The reason you have a positive number in "corrent depreciaton" and a blank or zero in "prior depreciation" is most likely because you incorrectly entered an "in service" date each year, of that tax year you were working on, with the exception of the first tax year that asset was "actually" placed in service.
Look at the 4562 for 2017. I fully expect the in service date for that asset has a date in 2017 in it. Then look at the 2018 form 4562. TI bet the in service date is a date in 2018. That would be wrong. Same for 2019 I expect also, which is wrong.
Basically, if the 4562's for 2017, 2018 and 2019 have a zero or it's blank in the "prior depreciation" column for that specific asset, that's because you told the program you placed that asset in service in "that" year. So am I right here? If not, then what is the in service date for each tax year on that asset, in the "in service" column for that asset?
Is it possible that you never went through the depreciation section while doing your return? Maybe you skipped the entire section.
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both state it correctly as 11/01/09
My screen indicates you're using the CD/Desktop version of Home & Business. If so, the first thing I want you to do is make a backup copy of the .tax2020 file located in the documents/turbotax directory. That way, due to my lack of knowledge of 1031 exchanges, if what we do makes things worse, you can go back and I'll bow out of this thread gracefully. I pretty much "know my stuff" for the assets section. But when it comes to 1031 exchanges, I typically stay out of those threads.
Since you have the 4562 titled "Depreciation and Amortization Report" that prints in landscape format from the 2019 return, you have all the information you need to just delete the asset completely from the 2020 return, and re-enter it anew. There is one caveat though, so that you get the "prior depreciation" number correct on the 2020 tax return. First, we'll enter the asset as a "new" asset on the 2020 return and confirm it's right. Once confirmed, you can then just delete the old entry.
- As the bottom of the Asset Summary screen click the Add an Asset button.
- Select Rental Real Estate Property, then continue.
- Select Residential Rental Real Estate, then continue.
- For Describe this residentail real estate, enter "exactly" what the name of the asset is on the 2019 forum 4562 in the Asset Description column.
- In the COST box, add together the amounts in the Cost (net of land) and Land columns for that asset. Enter the total in the COST box.
- In the Cost of Land box, enter the amount in the "Land" column (if present) for that asset.
- In the Date Purchased or Acquired box, enter the date you purchased or acquired this asset. It doesn't matter if this date was before you made this asset a rental asset. But this date must be the date of conversion to a rental asset, or before. This date is not used in figuring your depreciation anyway.
- Click Continue to go to the next screen.
- Select "purchased new" and select "always used this item 100% for business.". For the date you first started using it in this business, enter the date shown on the 4562 for this asset in the "Date in Service" column. Then continue.
- On this screen, you should see the total of all prior year's depreciation already taken. That number does "not" include your 2020 depreciation. That number "is" correct if all the data entered up to this point was correct. If you have no qualms with this and it "is" correct (may be off by a few bucks, but it's really not a big deal if so) then you can continue.
Now click the "show details" and lets do a comparison of the information presented, with the information on the 2019 form 4562.
Years to fully depreciate - This should match the number under the "life" column of the 2019 form 4562
MACRS Convention - These two letters should match the two letters to the "right" of the slash mark in the Method/Convention column on the 2019 form 4562 for that asset.
Depreciation Method - These two letters should math the two letters to the "left" of the slash mark in the Method/Convention column.
Description - This should match exactly, what's in the "Asset Description" column for this asset.
Cost/Cost Basis - This amount should be the sum of the amounts in the "Cost (net of land)" column and "Land" column. (Note that typically, only the property itself has an amount in the Land column.)
Cost of Land - This amount should be the same as the amount in the "Land" column
Date I started using it in this business - This date should match what's in the "Date in Service" column.
Business Use Percentage - This number should match what's in the "Bus. Use %" column for that asset.
Sold/Retired from business use in 2020 - This of course, will not be shown on the 2019 form 4562. If you entered the asset as I instructed, this asset will show NO. I don't know what happens with this with a 1031 exchange, if it gets changed to YES or whatever.
Asset Category - This is not directly reflected anywhere on the 4562. But for an asset classified as residential rental real estate, its "I - Residential Rental"
The last two now:
Section 179 Deduction - This should match what's in the "Section 179" column of the 4562. Take special note that "residential" rental real estate and it's associated assets "DOES NOT" qualify for the SEC 179 deduction. This is not true for "business" rental real estate. SO don't get confused.
Special Depreciation Allowance - Some assets for residential rental real estate "does" qualify for this SDA. That number is shown on the 4562 in the column labeled "Special Depreciation Allowance"
Okay, so lets see if the above helps make things right now for "at least" one asset at this point.
Thanks @Carl .
That sounds like exactly what I should try. I will try this later tonight.
I switched to CD/Desktop this year as the online version wouldn't let me edit forms. I needed the feature to do the 1031 exchange.
I will let you know how it goes.
I switched to CD/Desktop this year
I don't know if you're aware of this or not, but that means you would need to download the .tax2019 file from your online account and place it in the documents/turbotax directory, before you even started your 2020 tax return. That would be the only way possible for you to import the historical data from the 2019 tax return, into the 2020 tax return.
The import must be done at the very beginning of the 2020 return. You can't import it once you've passed the screen giving the option to import, unless you delete the .tax2020 file and start over from scratch.
Since you're using Home and Business, that tells me that the first thing you're dealing with "is" the rental property. So it's not like you already have a whole bunch of other stuff you already entered into the 2020 program. Therefore, I see starting over from scratch as a viable option, if you want. Of course, that's only if you can actually get the .tax2019 file out of your online account, without having to pay for it.