TT Business - Fed 1120-S Moved Depreciation to OK 512-S return Part 2, Line 6 Add-back Duplicated Federal Depreciation for Building 27.5 year in service 2011 (not Bonus)?

[nospam]

Asset setup as 27.5 year SL/MM in 2011 with no Bonus Depreciated Taken.

[PatriciaV]

Please clarify your actual question. Are you asking how to enter something on your Oklahoma business return? Or are you seeing an error message on that return?

[nospam]

My understanding is the 512-S Add-back for Duplicated Federal Depreciation is for tax years after Jan 1, 2023 if a taxpayer elects to immediately and fully expense qualified property for Oklahoma, they must add back federal depreciation that duplicates this treatment.  In my situation, I have property setup for 27.5 SL depreciation that was placed in service in 2011 (100% business use).  The 2025 depreciation was moved to the State return Part 2 line 15 (Depreciation) correctly, but was also placed on line 6 (Add-back duplicated federal depreciation) which cancels the deduction resulting in the Ordinary Income (loss) differing between the Fed and State Returns by the asset's depreciation amount for 2025.

[RobertB4444]

The Oklahoma add back is just for federal bonus depreciation.  Oklahoma does not allow accelerated depreciation, so it takes a regular depreciation deduction and requires that you "pay back" the accelerated deduction.  If you've been depreciating the property since 2011 you should have no add back of depreciation at all for this year.

[nospam]

Thanks for your reply.  This is my issue... I can't find a way to remove the add-back depreciation in TurboTax Business.  I also noticed that Oklahoma 512-S Part 3 is not only reporting the loss incorrectly on Line 1, Column B (should be the same as Column A), but Line 11 is adding the rows incorrectly in both columns.  They are off by the asset amount on the Add-Back depreciation Part 2, Line 6 (see below).  Note that I have verified no special or bonus depreciation is setup for the asset.

[DaveF1006]

It depends. Because your property was placed in service in 2011 and is depreciated over 27.5 years using the straight-line method, it doesn’t fall under the Part 2, Line 6 Add-back. That line is meant to prevent taxpayers from claiming both the Oklahoma full-year expensing election and federal depreciation on the same asset. 

The preferred method is to go to your Federal Asset Worksheet and ensure no "Oklahoma-specific" boxes were accidentally checked during the transfer. If you can't find anything there, then:

• Locate the Oklahoma 512-S: In the list of forms on the left, open OK 512-S, page 2. 
• Find the Add-back: Go to Part 2, Line 6.
• Override the Amount: Right-click the field and select Override (or Ctrl+D). 
• Manually enter 0 or remove the amount if there is an amount listed.

If the errors persist, you will need to address this in the Oklahoma State Interview section of your return.

1. Go to the State Taxes tab. 
2. Continue through the Oklahoma interview until you reach a screen titled "Any Other Additions?" or "Additions to Income".
3. Look for a line item labeled "Depreciation Add-back" or "Duplicated Federal Depreciation." 
4. If the software has "auto-populated" this field based on your federal assets, you may see the amount there. If it is an editable field, you can delete it or change it to 0.

Because this specific add-back (Part 2, Line 6) is tied to the new 2023 Oklahoma law, there is often a specific "Election" screen:

In the Oklahoma interview, watch for a screen that asks: "Did you elect to immediately and fully expense any assets for Oklahoma?"

1. If this is checked Yes, TurboTax assumes every asset is being fully expensed for the state and automatically adds back the federal depreciation to prevent double-counting. 
2. Ensure this is set to NO. Since your asset is from 2011, it doesn't even qualify for this election.

If the state interview doesn't show it, the "mapping" might be coming from the federal side:

1. Go to the Federal Taxes tab -> Deductions -> Business Expenses -> Depreciation. 
2. Edit the specific 2011 asset.
3. Proceed through the interview until you see a screen like "State Prior Depreciation" or "Special Handling for States."
4. Verify that no "Oklahoma Special Depreciation" or "Full Expensing" options are selected.

[nospam]

Deselecting The option on the asset to not include in OK state return fixed the issue.  Much Thanks