Prior 2023 Depreciation and Amortization Report

[eddyman33]

This is for Rental Property:

I have the previous Depreciation and Amortization Report from my last years private CPA.  On Turbo Tax it wants me to put the same purchase date as my LLC started, but I owned my rental property prior to creating my LLC.  Now Turbo Tax is saying  "Oops...you entered 01/13/2006 as the asset purchase date.  This date cannot precede the business start date of 02/20/2018. An asset will not begin depreciating until the business begins using it. And since the purchase date wasn't in 2024, select Back to Change it. "     Can someone assist me with how I can properly addendum this to correct my date and Method of Depreciation?

[ThomasM125 · Accepted solution]

Unless you are preparing a partnership Form 1065 where the business start date is listed on the return, It's not critical when you established the LLC as it won't show on a Schedule E. Also, if you were filing a Schedule E in previous yeas and the only thing that changed was the legal status of the entity, it would be appropriate to continue to use the old depreciation method.  So, you can enter the date you put the rental property into service as the start date for the LLC.

If you are filing a partnership return or you don't want to do what I just suggested, you will subtract the accumulated depreciation at the time the LLC was formed from the cost of the property and enter that as a new asset. It will then be depreciated over 27.5 year for a residential rental property. So, you will have a smaller annual depreciation amount spread out over more years. Also, if the fair market value of the property was less than the adjusted cost basis when the LLC was formed, you would us that as the basis for depreciation for the LLC.

[eddyman33]

I agree with your statement:  "the legal status of the entity, it would be appropriate to continue to use the old depreciation method.  So, you can enter the date you put the rental property into service as the start date for the LLC."  Would I continue where I was at on Depreciation Basis for 2023 last year or do I start it from the beginning 2006 Depreciation and Amortization Report (What is the column to use:  "Ending Accumulated Depreciation" or "Unadjusted Cost Or Basis" , since I will be using 27.5 year SL for the Depreciation Schedule?

Also a follow another question. If some of the columns are "0" in "Current Year Deduction". Do I need to show them on the new Depreciation Schedule?

[AmyC]

1. Yes, pick up from 2023 position using your 2006 information. You enter the date you started renting the house in 2006, using the same house and land values. Enter any other items being depreciated, like a new roof or refrigerator. Enter the dates those were placed in service, follow the same method of depreciation. Keep everything just the same.

2. You will enter the original cost of each item. The program will calculate depreciation and ask for you to make any adjustment to the program. It should be the same or very close to your accumulated deprecation totals for 2023.

3. Items that are fully depreciated will show a zero and do not need to be entered unless you took a sec 179 deduction and may need to recoup that deduction since it would not be fully depreciated using the straight line method.