See attached highlighted screenshot from IRS. As I have 3 rental properties, it is not clear what does it means that election "applies to all qualified property that is in the same class of property...". By electing out on one property, does it obligate me to not take bonus depreciation for 5 yr asset class also for the other 2 properties?
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here is abstract from IRS publication 946 - depreciation
and 168(k)(7)
How Can You Elect Not To
Claim an Allowance?
You can elect, for any class of property, not to deduct any
special depreciation allowances for all property in such
class placed in service during the tax year.
To make an election, attach a statement to your return
indicating what election you are making and the class of
property for which you are making the election.
The election must be made separately by each person
owning qualified property (for example, by the partnerships, by the S corporation, or for each member of a consolidated group by the common parent of the group).
168(k)(7) Election out
If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such taxable year. An election under this paragraph may be revoked only with the consent of the Secretary.
however TT will allow you to elect out on 1 property but will allow bonus for the same class on other property?
personally, since the election is made at the taxpayer level, I think TT does it wrong.
here is abstract from IRS publication 946 - depreciation
and 168(k)(7)
How Can You Elect Not To
Claim an Allowance?
You can elect, for any class of property, not to deduct any
special depreciation allowances for all property in such
class placed in service during the tax year.
To make an election, attach a statement to your return
indicating what election you are making and the class of
property for which you are making the election.
The election must be made separately by each person
owning qualified property (for example, by the partnerships, by the S corporation, or for each member of a consolidated group by the common parent of the group).
168(k)(7) Election out
If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such taxable year. An election under this paragraph may be revoked only with the consent of the Secretary.
however TT will allow you to elect out on 1 property but will allow bonus for the same class on other property?
personally, since the election is made at the taxpayer level, I think TT does it wrong.
Since each property is entered and treated separately on the SCH E, you'll find that each property will also have their own individual IRS Form 4562 for the property assets also. So it's no problem for you to depreciate 5 year property on one rental, over 5 years,, and then to take the bonus depreciation on the same type of asset that is being used on another property.
No, you are not allowed to do that.
If you elect out of Bonus depreciation for 5 year property, that election applies to your entire tax return. So if you elect out, you elect out for all 5 year property.
If you decide to elect out of Bonus Depreciation, and want a bigger deduction for the other two properties, you may still be able to claim Section 179 on those assets.
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