Desktop Turbotax Form 4562 shows zero in prior depreciation

[rajamony]

Spent today searching through a number of questions and answers on this board. Two that were particularly relevant/useful were https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/if-my-rental-home-has... and  https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/all-prior-depreciatio.... "Champ user" Carl's responses have been very useful.

Still I have some issues, here are the details:

1. Using Turbotax Premier, desktop version, Premier (Inv. and Rental Property) since 2010
2. Bought foreign property in December 2010
3. Placed property into rental in 2014. For tax years 2014, 2015, 2016, 2017, TT generated Schedule E and forms 4562, landscape mode, one titled "Depreciation and Amortization Report" and another similar for AMT
4. Each form 4562 for all years 2014-2017 lists date in service as 08/03/2012
5. Each form 4562 lists "Prior Depreciation" as 0 and Current Depreciation as $1888
6.  Other interesting columns in each of the 2014-2017 form 4562s:
   1. Bus. Use: 100%
   2. Sec. 179: Blank (and 0 where it says Subtotal prior year and Totals)
   3. Special Dep. Allowance: Blank (and 0 where it says Subtotal prior year and Totals)
   4. Life: 40.0 (I believe this is correct since the property is foreign and placed in service prior to 2017)
   5. Method/convention: ALT/MM
7. Property ceased being rental in 2017. No Schedule E or 4562 in years 2018 until now. This may be because I didn't go into the Rental Income part of the TT interview those years. Based on Carl's responses, I believe it appropriate the property switched to personal use on 1/1/2018 as it wasn't rented out.
8.  The property was never used for personal use. Never primary home.
9. Property was sold in 2022. Sale price was substantially lower than purchase price in US dollars  

I am entering the sale in the "Sale of Business Property" section, since it is no longer an active rental. I have been able to calculate the purchase and sale prices using the exchange rates in vogue at those times (both purchase and sale involved multiple payments, so picked the rate appropriate on each of those days). 

My questions are:

• How do I find the depreciation? Is it 0 because each "Prior year" depreciation shows 0 in the forms 4562? Or is it $1888 * 4 years = $7552?
• The sale of business property section asks for alarmingly little information. Just the basis, sale price, depreciation, dates purchased/sold. Since the sale is foreign, there is no form 1099-B etc. Wouldn't the IRS care about more details like the sale deed etc.? 

[tagteam]

Contact Support.

How do I contact TurboTax? (intuit.com)

[Mike9241]

the 4562 doesn't show prior depreciation! on what line/column do you think it should be?  

[VolvoGirl]

If you are using the Desktop program this might help......

Form 4562 is just a Summary of the Depreciation for the current year and doesn't list the items.

Using the Desktop program you can get an Asset Life History worksheet but you have to do it in Forms Mode, click Forms in the upper right (upper left for Mac) You can't get detailed worksheet showing all the assets but you can get the Asset Life History on each one. It doesn't print out with your return or save in the pdf. So you have to print each Asset Life History individually.

Scroll down the list of forms in your return to a Asset Entry or Asset Worksheet and open it. Then down on line 14 is a QuickZoom button to Asset Life History, Click on that.

[rajamony]

To tagteam - just contacted support, they were not able to help.

To Mike9241 - correct, it does not show prior depreciation. The property went into service in 2014. I expect the forms 4562 in returns for 2015 and beyond to keep accumulating the depreciation, in the column titled "Prior Depreciation" of form 4562.

To VolvoGirl - amazed that TT 2017 still works and actually opened up a copy of my 2017 return! I was able to find the "Asset Life History" for the property and it has non-zero numbers. Thank you! Can you help me understand what these numbers mean and why they're different from what's in form 4562?

[VolvoGirl]

Sorry I don't know.  But the Asset Life History report should be self explanatory.  

[tagteam]

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@rajamony wrote:

Can you help me understand what these numbers mean and why they're different from what's in form 4562?

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The Asset Life History report in TurboTax displays prior year depreciation for each tax year the asset was in service and the deduction for each year (as well as the AMT information). 

After the first year an asset is placed in service, you won't have a 4562 unless you have listed property. Note the information under Who Must File:

https://www.irs.gov/instructions/i4562#en_US_2022_publink1000309252

[tagteam]

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@rajamony wrote:

....I expect the forms 4562 in returns for 2015 and beyond to keep accumulating the depreciation, in the column titled "Prior Depreciation" of form 4562.

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I suspect you're looking for the Depreciation and Amortization report generated by TurboTax (which also has "Form 4562" imprinted on it).

This form may have been deleted by the program if the asset was converted to personal use in an earlier year or for some other reason.

[AmeliesUncle]

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@rajamony wrote:

1. Using Turbotax Premier, desktop version, Premier (Inv. and Rental Property) since 2010
2. Bought foreign property in December 2010
3. Placed property into rental in 2014. For tax years 2014, 2015, 2016, 2017, TT generated Schedule E and forms 4562, landscape mode, one titled "Depreciation and Amortization Report" and another similar for AMT
4. Each form 4562 for all years 2014-2017 lists date in service as 08/03/2012
5. Each form 4562 lists "Prior Depreciation" as 0 and Current Depreciation as $1888

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The worksheet says it was placed in service in 2012.  But you are saying it was placed in service in 2014.  Why the difference?  Are you mistaken, and it was placed in service in 2012?

What was the property used for between December 2010 and whenever you placed it in service?

Are you SURE you used TurboTax in 2012 and 2013, *AND* you transferred the prior year information to 2013 and 2014?  If you did not do that, that is why the program is not showing the "prior depreciation".  If you set up an asset that was already in service, if you don't enter the "prior depreciation", that won't carry forward because it didn't know what happened in 2012 and 2013.

Just to verify, the depreciable Basis is about $75,520, and that is AFTER subtracting the land, right?  I just want to verify you factored in the land so the program could do the depreciation correctly.  For example, if you paid $85,520 and $10,000 of land, it would give you $75,520 for the depreciable Basis.

[rajamony]

tagteam said: This form may have been deleted by the program if the asset was converted to personal use in an earlier year or for some other reason  and   After the first year an asset is placed in service, you won't have a 4562 unless you have listed property.

The asset stayed as a rental 2014-2017 and I do see both Schedule E and forms 4562 (aka Depreciation and Amortization report for regular and AMT) in those years. So the asset was not converted to personal use during those years. However, see response to next point below.

AmeliesUncle said: "The worksheet says it was placed in service in 2012.  But you are saying it was placed in service in 2014.  Why the difference?  Are you mistaken, and it was placed in service in 2012?"

I went back into my .tax2014 return and see that I answered "Purchase Date" as December 2010 and the "Available Date" as 8/3/2012. The dialog box in TurboTax 2014 says (said): "Also enter the date the rental property was ready and available to be rented out as well as the original purchase date". The property was prepped between 2010 and 2012. Should I have answered "Available Date" as the date it was really put into service as opposed to the date it was available to be put into service? 

What was the property used for between December 2010 and whenever you placed it in service?

Nothing, it was being built/prepped.

Are you SURE you used TurboTax in 2012 and 2013, *AND* you transferred the prior year information to 2013 and 2014?  If you did not do that, that is why the program is not showing the "prior depreciation".  If you set up an asset that was already in service, if you don't enter the "prior depreciation", that won't carry forward because it didn't know what happened in 2012 and 2013.

Yes I used TurboTax in 2012 and 2013 (I found the disks, plus I have the .tax2012 .tax2013 files) and I've always transferred information over, so expect to have done this in 2013/14 as well.

Just to verify, the depreciable Basis is about $75,520, and that is AFTER subtracting the land, right?

Correct.

The Asset Life History information (2017 return, Asset worksheet, line 14 QuickZoom to Asset Life History - thanks to VolvoGirl) does show a depreciation table with non-zero prior year, going up each year. Given where things stand now, would it be reasonable to use the end-of-2017 depreciation information from this table and use that as the depreciation value? The property wasn't rented from 2018 onwards. 

[AmeliesUncle]

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@rajamony wrote:

I went back into my .tax2014 return and see that I answered "Purchase Date" as December 2010 and the "Available Date" as 8/3/2012. The dialog box in TurboTax 2014 says (said): "Also enter the date the rental property was ready and available to be rented out as well as the original purchase date". The property was prepped between 2010 and 2012. Should I have answered "Available Date" as the date it was really put into service as opposed to the date it was available to be put into service? 

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The "placed in service" date is when it is ready, available and advertised for rent.  So what was the exact date that it let it be know it was available for rent, and somebody could have moved in?

That is the date that you SHOULD have started reporting depreciation and should have been reporting a rental on your tax return.  So as of now, it sounds like you filed your first rental tax return in 2014, but entered 2012 as the placed in service date (which is why the program is not carrying forward those amounts).

Once we figure out that "placed in service" date, we can figure out the accumulated depreciation.

[rajamony]

Thanks so much for the replies! 

The property was available to be rented on 8/3/2012. Took a long time to find a rentor, which happened only in 2014. At the risk of putting words in your mouth, I think you're saying I should have started going to the Rental interview in TT from 2012 onwards and just reporting that it was rented out for zero days. 

I mentioned the Asset Life History information from the 2017 return in a previous response. That history does indeed show depreciations starting from 2012 onwards, accumulating forward each year. It goes up to 2052 which is when the 40-year depreciation period ends. Since the rental usage ended in 2017, should I take the depreciation in that Asset Life History table until and including 2017? 

[AmeliesUncle · Accepted solution]

Yes, you should have been reporting it in TurboTax since 2012.

Yes, you can add up all of the years of depreciation, including the partial year of 2012 and the full year of 2013.

If it was taken OUT of service in 2017, then 2017 should have been a partial year too.   But if you accidently took the full year amount, just use the full year amount.

[rajamony]

Thanks to everyone who answered on this post!

As I go through filing taxes, I am discovering something strange - the loss on the property sale appears to be offsetting W2 income! I want to make sure I am capturing this sale in the correct place. Specifically, the property was rented out during the years 2014-2017 (four years). It then sat idle until 2022. I marked it as a "Sale of Business Property". Did I do the right thing? 

Apparently this is a Section 1231 loss based on this Turbotax article. Still puzzled because I expected only an offset of 3000 more than my 2022 capital gains with the remaining loss carried forward to 2023+. Seeing the loss offset income doesn't "feel" right. 

[AmeliesUncle]

The program is correct.

At least of purposes of the sale (and therefore capital gain/loss), the rental is considered as a 'business' which allows the full loss.   However, for other purposes, a rental might not necessarily be classified as a 'business' (it depends several factors).