Depreciation is showing as zero

[Berchu]

This is my first year using TurboTax.  I had an accountant fix my taxes last year for a rental property as I hadn't been taking depreciation correctly.  The property was first put into service in 2007 and the depreciation schedule should be 27.5 years.  I entered the prior depreciation from last year's return and the depreciation for this year should be the same as for last year.  However, it's showing up as zero.  The asset isn't fully depreciated as I'm only 15 years into the 27.5.  Why is it showing up as zero?  Is there a way to manually enter the correct number based on the depreciation schedule I receive from the accountant?

[AnnetteB6]

Try using the following steps to replicate the same depreciation that was being used on your previous tax return.  Also, be sure that the percentage of business use is correct and not set to zero.

• Start from the Schedule C or Schedule E section of your return until you get to the Assets/Depreciation section.
• Proceed to the point where you are adding an asset on the page titled Describe This Asset.
• In order to enter the asset exactly as it has been reported in the past, choose the last option on the list, Intangibles, Other Property, then click Continue.
• On the next page titled, Tell Us a Little More, select Other asset type, then click Continue.
• Enter the detailed information about the asset:  description, cost, date purchased or acquired.  Click Continue.
• Move forward with additional details on the next screen, then click Continue.
• Select the appropriate Asset Class, then click Continue.
• Choose the MACRS Convention, then click Continue.
• Select the Depreciation Method, then click  Continue.
• Answer the question regarding Listed Property, then click Continue.  There may be some additional background questions as well, keep going.
• You will eventually come to a screen to confirm the Prior Depreciation, enter the data and click Continue.
• Finally, you will see an Asset Summary screen with the current year depreciation amount listed.  There is also a check-box here to Show Details.  This will open a full description for the asset so you can verify that it matches the previously reported information.  If it does not, you can choose to go Back and re-enter the data that needs to be changed.

[Carl]

While it "might" work doing it @AnnetteB6 's way, it may not depending on how the CPA fixed this.

From last year's return, you have two form 4562's for that rental property that both print in landscape format. One is titled "Depreciation and Amortization Report" and the other is "Alternative Minimum Tax Report". I'm only interested in the first one at this time.

For the asset listed, what's the data under each column? If you want, you can scan in that form, ensuring that you blank out all personally identifiable information before you post it here. (I.e., make sure your name and social security number do not appear on what you post here.)  I suspect the CPA may have done things differently than what I would expect. I'm not a CPA myself. So that's the reason for my suspicion.

As an example, the coding in the Method/Convention column should be MM/SL

[Berchu]

Thanks Annette! 

[Berchu]

Thanks Carl!  I found my error.  Turns out it was the purchase amount - I thought the first question was supposed to be buildings but it was total cost.  It's still not exactly the same as the accountant's number, but it's close.  MM and SL were both what the accountant used last year as well. 

[Carl]

@Berchu it seems rather odd the way TurboTax asks for your cost on real property. But it's the most efficient way to enter the data so that the program can figure the depreciation basis the way the IRS figures it.

I've seen some programs that will ask for the land value and the structure value separately, treating the sum of those values as the total cost basis.

But TurboTax asks for the total cost first. Then it asks you how much of that total cost is for the land. Then, the program (not you) subtracts the land value from the total cost to arrive at the amount of that total cost that will be depreciated.

Personally, I would prefer the program to asks for all three; i.e., total cost, cost of structure, cost of land. But I understand why the program doesn't do it that way, since there are some things that can add to your total cost basis. For example, title transfer fees are added to your cost basis, and the program does ask you for that, among other costs that add to the cost basis.