Am I allowed depreciation for a rental asset (furnace) placed in service on 1/15/2018 and sold on 11/20/2018? The depreciation is showing as $0.

[MichaelL1]

Yes, you should have depreciation on the asset for those 10-11 months.  Make sure it lists it as 100% business and placed in service.

[Anonymous]

I doubled checked that the 100% business box was checked and my placed in service and date I stopped using this asset were correct but it still shows the depreciation as zero. I also answered "yes" under special handling for this asset because it was traded as part of a like kind exchange if that makes a difference.

[MichaelL1]

That can make a difference --what did you trade for a furnace?  If this was like a trade in where they took something and you got the furnace or the whole property was a like kind exchange?

[Anonymous]

The whole rental property was traded in for a like kind property. Form 8824 was completed and attached to the Schedule E. I went through each asset listed on the depreciation page and noted the date it was sold. My other assets that were placed in service prior to 2018 show a partial depreciation for the year. The furnace is the only asset that is not depreciated.

[MichaelL1]

That make it even more perplexing.  I assume it not written off also and expensed.  Best suggestion I can give is to compare line by line with the assets that depreciation was taken to see what is different.

[Anonymous]

Correct it was not expensed since everything I read says a new furnace is considered an improvement which should be depreciated. If I do not check off that the asset was sold, it allows me to take the entire amount as a special depreciation. I'll go into the form and compare what is different between this one and the other assets. I just wasnt sure if there was a rule about not being allowed to depreciate an asset if it was used for less than a year or something along those lines. Thanks!

[TaxGuyBill · Accepted solution]

No, you are not allowed depreciation for any asset that was "placed in service" and disposed in the same tax year.

https://www.irs.gov/publications/p946#en_US_2018_publink1000107322

[Anonymous]

Thank you!