Entering Rental Property Assets

[pnored]

I am doing my taxes for the 1st time this year (2019). I am working on entering Rental Property Assets. I am using my prior return prepared by an accountant. So far so good. However, do I enter the assets that are zeroed for record keeping purposes with the IRS? I dont want something to be triggered with the IRS because I didnt include them.  I certainly dont want to enter them if I dont need to. 

Thanks,

Parrish

[tagteam · Accepted solution]

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@pnored wrote:

I dont want something to be triggered with the IRS because I didnt include them.  I certainly dont want to enter them if I dont need to. 

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It is you choice; you can enter the assets into TurboTax which should then show the assets as having been fully depreciated or continue to track them outside of the program.

One advantage of entering the assets into the program is the accumulated depreciation (and other data such as date of purchase, purchase price, et al) will carry over from year to year in your TurboTax tax file so the data will already be in the program if and when you sell the property.

Since the adjusted basis for the assets has been fully recovered through depreciation deductions over the years, there is nothing left to report to the IRS until such time as you dispose of the assets.

[Carl]

You should enter "ALL" assets, and especially those that are already fully depreciated. If you don't enter them, then you risk an audit from the IRS asking you what your disposition of those missing assets was.

When you dispose of an asset you are required by federal law to recapture the depreciation on that asset and pay taxes on it in the year of disposition. So if you don't enter all of your assets, you risk getting a letter from the IRS asking you what happened to those depreciated assets, along with a bill for the depreciation on those assets.

If you claimed any SDA on an asset, (Special Depreciation Allowance) make sure you enter that in the program also.

[tagteam · Accepted solution]

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@Carl wrote:

You should enter "ALL" assets, and especially those that are already fully depreciated. If you don't enter them, then you risk an audit from the IRS asking you what your disposition of those missing assets was.

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The quoted statement is inaccurate. The IRS has no way of knowing whether or not a fully depreciated asset has been disposed of by a taxpayer and there is no form or schedule on a federal individual income tax return to report fully depreciated assets for which there has been no disposition; entering the assets into TurboTax only creates a record for the user.

Tracking fully depreciated assets is critical, of course, but the IRS is technically only interested when there has been a disposition of those assets.

[pnored]

thanks for everyone's input!