Schedule E’s depreciation expense is incorrect

[daveoh]

I’m using Turbo Tax’s default depreciation method for rental property. 

Years to fully depreciate – 27.5 years

MARCS Convention – MM

Depreciation Method – SL

For some reason the AMT depreciation report has a value in the adjusted/preference column which is changing the current depreciation value in the Depreciation and Amortization Report.

In the step-by-step section, I entered the prior depreciation, i.e. X.

In the AMT Depreciation Report, there is no value shown for prior depreciation.  The current depreciation is X and there is a value in the adjusted/pref column, i.e. Y.

The Depreciation and Amortization Report has the correct value for the prior depreciation, X, but the current depreciation value is X + Y.

The value in Schedule E’s depreciation expense (line 18) is using the current depreciation value form the the “Depreciation and Amortization Report”, (X+Y), instead of just the prior depreciation, X.    

I've tried to modify the number via the form, but that number is in black font.  I can only modify the fields in blue font.

How do I get Schedule E to just have the value of X, the prior year’s depreciation?

In the "Other Tax Situation" section, the AMT value was zero.  I didn’t use Turbo Tax last year so it's not importing values from a previous year.

@GiseleD

@HollyP 

@DavidS127 

Thanks

[DavidS127 · Accepted solution]

More information may help resolve your issue.  For example, the amount for Schedule E line 18 in your 2019 tax return should be the amount of the current year depreciation (i.e., 2019) not the prior year depreciation.  Can you clarify why you say in a couple of places that you want the Schedule E to show an amount for prior year depreciation?

Also, you say you entered prior year depreciation, and that this is the first year using TurboTax.  When you set up an asset in TurboTax for the first time, the software calculates the prior year depreciation and automatically populates that prior year depreciation "box" with that amount.  Can you clarify why you make an entry on some screen for prior depreciation? 

What may have happened is that you entered an amount for prior depreciation that is different that what TurboTax has calculated for prior year depreciation, and the difference between the "prior year depreciation calculated by TurboTax given daveoh's parameters" and the "prior year depreciation entered by daveoh" has become an adjustment that shows up on the AMT report.  TurboTax is now trying to "true up" your current year depreciation by that difference, so that your "total depreciation to date for the life of the asset" is correct.  In other words, TurboTax is adding or subtracting a "difference between prior year depreciation you took and the prior year depreciation you should have taken" to the current year depreciation.

Note that there are two depreciation reports in Forms mode; the Depr Report (for regular depreciation) and the AMT Report (for AMT depreciation).  Because this asset uses straight-line depreciation, the prior year depreciation should not be any more than the regular depreciation (i.e., for residential rental property, regular and AMT depreciation are the same).

Also, check the Asset Life History report for the rental property (QuickZoom button on the Asset Wks in Forms mode of Download/CD versions).  The regular and AMT columns for current year and prior year should be the same on that report.

[daveoh]

Thank you DavidS217!  I misinterpreted "Amount of Depreciation Taken in Prior Years" as the amount taken last year, not the total amount of depreciation taken over the years since using the property as a rental.  I entered the total amount of depreciation over the years as a rental and the value is correct now.