How do I transfer Special Depreciation Allowance for an asset placed in service prior to the start date of a newly formed LLC from an older LLC with the same members

[hiramnj]

We are transferring rental units from one LLC to a smaller new LLC and need to retain the special depreciation allowance that was used the year the property was put in service. We are using TurboTax Business and there doesn't seem to be a place where the special depreciation allowance can be entered. The software specifically asks to insert all prior year depreciation without the special depreciation allowance, but then does not provide an opportunity to insert the special depreciation allowance. Without the ability to add the special depreciation allowance, the amount to be depreciated for the 27.5 years is incorrect. We already had to adjust the business start date to the date the asset was put in service in order to even put the asset in the system. After putting it in the system we had to go back in the forms view and insert the date the new LLC was actually formed.

[tagteam]

Are you referring to this:

https://www.irs.gov/instructions/i4562#en_US_2023_publink1000309286

On what asset did you take the special depreciation allowance? Or are you actually referring to something else, such as the de minimis safe harbor or special allowance for active participation?

[hiramnj]

Yes, I was referring to the information discussed in the link, however the special depreciation allowance of 50% was taken in 2012 when the asset was first placed in service under a different LLC (with the same members). I just need to carry that depreciation over to the 2023 form 4562. If we kept the asset under the old LLC, I am sure the depreciation would have carried over like it did the previous 10 years. Once moving the asset over to the new LLC in 2023, I (along with personnel on the help desk) couldn't find where to insert it.

[tagteam]

This should be a carryover basis and you should not need to generate another 4562 since this is not the first year the asset was placed in service (and, again, the basis is carried over from the old LLC).