I would like to depreciate my rental property using the ADS method of 40 years. I was told to override the depreciation type on the Asset Worksheet (Line 45) and change it to ACRS, update Asset Class to R, and change recovery period to 40 years. However, when I change all of this, Turbo Tax calculates depreciation expense of $0. The depreciation expense should not be zero. How can I change this?
If you are using TurboTax for desktop, you may change the Depreciation method, class, and recovery period for your Rental Asset in Forms Mode. You will need to override certain fields, which may prevent you from e-filing your return (this is an IRS limitation).
Click the Forms icon in the TurboTax header.
Look for "Asset Wks [description]" in the left column. Click the form name to open it in the large window.
Scroll down to Line 45 Depreciation Type. Select ACRS from the drop-down list.
You will also need to change the Asset Class (R) and enter a Recovery Period in years (40).
Check for other fields in pink to be sure you have correctly set up the asset for ACRS depreciation.
You may check the results of your changes by opening the "Depr Report" under the Asset Wks in the list of forms.
Click the Step-by-Step icon to return to the interview screens.