Hi, I did a cost segregation study, so there is accelerated deprecation. Can you please advise how to reflect the accelerated depreciation in the TurboTax system?

[ColeenD3]

There are no essential differences between how the Desktop and Online versions handle taxes, but one benefit of the Desktop is that you can view your forms along the way instead of at the end when you pay. You can also handle certain circumstances more easily in Desktop.

Form 3115 is not available through TurboTax. You will either need a tax professional or do it by hand.

Below are the IRS links related to the change in accounting method. TurboTax does not have that form.

Maybe these will help.

Form 3115, Application for Change in Accounting Method

Change-in-Accounting-Method

Instructions for Form 3115 

Instructions

Form 3115,

Form 3115

[nanosuna1977]

Thank you Coleen. 

Orlando

[nanosuna1977]

Hi Coleen,

I am trying to figure out what 179 deductions are.  I googled it but I am still not clear.  Would you mind elaborate on what this is?

thanks again

[nanosuna1977]

Check this company out.  

https://diycostseg.com/

[DianeW777]

Of Course. The Section 179 expense election is a choice you have the first year certain property is placed in service.  This allows you to take all or a portion of the cost of depreciable property instead of depreciating it over the life of the asset.  The most common is tangible personal property.  The details are discussed in the publication below, page 15.

• IRS Publication 946 

Section 179 allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service.  For tax years beginning after 2017, the TCJA increased the maximum Section 179 expense deduction from $500,000 to $1 million. 

The phase-out limit increased from $2 million to $2.5 million. These amounts are indexed for inflation for tax years beginning after 2018.

@nanosuna1977

[nanosuna1977]

Do you know how to use 5 yr and 15 yr  depreciation assets in Turbo Tax for properties that were purchased before 202,1 so that the full amount spent on these assets can be taken as bonus appreciation for the 2021 tax year?

When I input these items in turbo tax, it automatically spreads the deduction over 5 years or 15 years respectively for properties bought before 2021.  For properties bought in 2021, it works just fine and   I can take the full amount as bonus appreciation for 2021.

[MJM2022]

Hello, 

Just reading this thread from 2021.  I am trying to input a cost segregation study for a newly acquired property that was put in place during 2021 and an older property that was put in place in 2019.  

I'm struggling a bit with how to get this done in the turbotax online platform.  Based on this thread was anyone successful in getting this entered correctly, and if so how/ where did you do this on turbotax?  

Feedback is much appreciated.  

[DianeW777]

The two properties must be entered separately.  They were not placed in service the same year, so each has a different recovery beginning and ending period. Enter each asset with the date placed in service and the type of property. If this is real estate they must be entered separately for the same reason.

@MJM2022

For property placed in service prior to the current year, and if Section 179 had not been elected in the first year, then it cannot be elected in any succeeding year.  Only property placed in service in the current year, that is not real property can use Section 179, election for 2021.  

@nanosuna1977

Please update here if you need further assistance.

[Hazen33]

@DianeW777 , somewhat related question for you. I did a cost seg study on a property, and I’m inputting the various line items in TT - 5 Year items, 15 year items, and then the 39 year items (Short term rental commercial property). I noticed for the 1st line item of the 5 year items, it gave me the recommended option to use the Section 179 for 100 depreciation but when inputting the 15 year item, it didn’t have Section 179 as an option and instead had the ‘Special Depreciation’ option, which I chose. So I have the 5 year items set as Section 179 and the 15 year item as Special Depreciation and then the rest over 39 years. Does this sound right to you? Thanks!

[RobertB4444]

This is correct.  The 15 year items are eligible for bonus depreciation as opposed to section 179.  You have done everything correctly.

@Hazen33 

[Critter-3]

Personally the 179 deduction is NOT a good choice when the 100% bonus depreciation option is still valid ... I would change the 179 to bonus everwhere.

[The Numbers Agent]

Can you elaborate why? Thank you.

[DianeW777]

Perhaps.  Each person has their own idea about what might work best for them.  Here are some pieces of information about this topic and it's important to remember that all depreciation, including Section 179 must be recapture at some point. Section 179 requires recapture (an amount added back to your income) when business use drops to 50% or less.

You can deduct your entire Investment no matter how much you spend per year. Bonus Depreciation deduction can be larger than your business income. Unlike the Section 179 deduction, Bonus Depreciation must apply to 100% of an asset's cost and all assets must be in the same category.

• Category simply means the class life or the recovery period (5 or 7 or 15 year recovery for example).

You can take both Section 179 and Bonus Depreciation allowances, but Section 179 must be applied first, and any amount over the $1,080,000 limit (maximum for 2022, limited by income and possibly carried over to the next tax year) to Section 179 may then be taken in bonus depreciation. For tax year 2022, the Bonus Depreciation allowance is 100%.

In general, taxpayers may elect out of bonus depreciation for any qualifying property placed in service during the taxable year. The election applies to all property of the same property class that is placed in service by the taxpayer in the same year.

@The Numbers Agent 

[Ru771]

How did you add the items? Did you do them individually as assets? Thanks for any info on this.

[Ru771]

@Hazen33 thanks for any info!!