AMT depreciation for 5 Year asset is 200DB. Cant change to 150DB for older asset.

[Anonymous]

I used a different tax filing software last year for 2020. I am switching to Turbotax for 2021.
My prior AMT depreciation for a 5 YR asset for my rental property was calculated using 150DB. However, TT calculates all AMT depreciation using 200DB. I am also unable to change this in the forms mode for an older asset. Please help.

[Carl]

Is this for a SCH C asset or a SCH E asset? Also, what is the asset and it's MACRS classification on the prior return? You "may" need to enter the asset manually in the "other assets" section.

[Anonymous]

@Carl 
SCH E Asset 
A Refrigerator

On the prior year's 2020 return, it's a 5 YR Asset with 150DB AMT depreciation. For regular depreciation it is 200DB.

Also, I am adding a new asset Dishwasher in 2021 which is also showing up as 200DB AMT depreciation. Please let me know if both assets should be added as other assets. If yes, how.

Update: I added it as another asset and the AMT depreciation is still taken as 200DB and I am unable to change it to 150DB.

[AmeliesUncle]

Where exactly do you see that TurboTax is using 200%DB for AMT?

[Anonymous]

200DB AMT depreciation

[Anonymous]

@AmeliesUncle In the Alternative Minimum Tax Depreciation Report related to form 4562 in the MAC download edition of TT.

[AmeliesUncle]

That is really weird.  As you said, that is wrong.

I use the Professional version of TurboTax (ProSeries, on Windows) and it is showing up correctly.  So I'm not sure what is going wrong with your situation.

Unfortunately, you may need to call support.

As a side note, are you subject to AMT, or anywhere near being subject to AMT?  If not, the AMT depreciation would not matter (although it would still be quite concerning that the program is doing it incorrectly).

[Anonymous_]

See https://www.irs.gov/publications/p527#en_US_2020_publink1000219087

5-, 7-, or 15-year property.

For property in the 5- or 7-year class, use the 200% declining balance (DB) method and a half-year convention. However, in limited cases you must use the mid-quarter convention, if it applies. For property in the 15-year class, use the 150% declining balance method and a half-year convention.

You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. The choice to use the 150% method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. You make this election on Form 4562. In Part III, column (f), enter "150 DB." Once you make this election, you can’t change to another method.

If you use either the 200% or 150% declining balance method, figure your deduction using the straight line method in the first tax year that the straight line method gives you an equal or larger deduction.

[AmeliesUncle]

Deleted.  I need to think about that again.  🙂

[AmeliesUncle]

It is using 200% for regular depreciation, so the taxpayer did not make the election to use 150%.

But it should still be using 150% for AMT purposes, not 200% 

https://www.irs.gov/instructions/i6251#en_US_2021_publink64277pd0e1178

[Anonymous]

@Anonymous_ @AmeliesUncle @Carl 
As far as I know, the IRS requires us to use 200DB for regular depreciation and 150DB for AMT depreciation.
In any case, TT does not allow me to change the depreciation methods in the federal return.

Note: TT does this correctly for CA state return. It uses 200DB for regular and 150DB for AMT.

[Anonymous_]

Strange. Below is a screenshot of the Guidance in the program.

[AmeliesUncle]

@Anonymous_  Is correct; I had forgotten about the Bonus Depreciation thing.

If it was eligible for Bonus Depreciation (which it was), then AMT is 200%.

EDIT:  But looking at that "guidance" in the program, that is severely outdated, as some of the rules changed a bit in 2016 in regards using 150% or 200% and Bonus.

[Anonymous_]

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@AmeliesUncle wrote:

EDIT:  But looking at that "guidance" in the program, that is severely outdated, as some of the rules changed a bit in 2016 in regards using 150% or 200% and Bonus.

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Yessir; a lot of the guidance is out of date and some of it is way out of date.

There is one bit in the Rentals section that provides erroneous guidance about not-for-profit rentals and that one has been there for years.

[AmeliesUncle]

Yeah, sadly Intuit doesn't care at all about accuracy.  That is one of the reasons why I had left here a few years ago (the only reasons why I came back is a combination of boredom during Covid and that I enjoy helping people).