Turbo Tax has a glitch relating to Special Depreciation that incorrectly calculates depreciation

[gg727272]

Turbo Tax has a glitch relating to Special Depreciation that incorrectly calculates depreciation that needs to be fixed ASAP.

Properties used for rentals require depreciation, including certain items, such as appliances.  There is a Special Depreciation (SDA) permitted that will accelerate depreciation and can only be used during the first year that item was placed into service.   The SDA is being phased out and in 2023 it was 80%.  We took the 80% SDA last year and the remaining 20% was placed into a regular 5-year MACRS depreciation.  Our depreciation for the remaining 20% MACRS was $443, meaning we should have depreciation of $443 this year, and the next three years.

Under "Confirming Your Prior Depreciation" one is asked to enter total depreciation for previous years but states "(excluding any Section 179 deduction or first-year special depreciation allowance)."  If one clicks on that page "Where can I find Prior Depreciation?", it states "Do not include any Section 179 or Special Depreciation Allowance (SDA) here.  If your asset qualified for one or both of them in the first year you used it, we will ask you for those amounts next."

Unfortunately, Turbo Tax only asks for previous Section 179 depreciation BUT NEVER ASKS FOR PREVIOUS SPECIAL DEPRECIATIONS.  As a consequence, Turbo Tax figures our Depreciation this year as $4,250, which is way off (it should be $443).

Other people are complaining about this exact same issue but Turbo Tax is not fixing the problem.  There are only two weeks left until April 15th.

[Mike9241]

$443 for year 2 is also wrong. MACRS does not work as you posted. For a 5- year asset subject to the half-year convention double declining balance is used for year 1 (in year 1 you only get 1/2 year's depreciation which is made up in year 6) through 3.  In year 4, the depreciation switches to straight-line over the remaining life of 2.5 years. 

see table A-1 in IRS pub 946

https://www.irs.gov/forms-pubs/about-publication-946 

I'm guessing that the appliances cost you around $11075

80% SDA would be 8860, leaving you with a depreciable basis of 2215

1st year, the regular depreciation on that 2215 would be 20% or 443

2nd year, the depreciation would be 40% of the remaining basis of 1772 =709 or 32% of the 2215

3rd year, 40% of remaining basis of 1063 = 425 or 19.2% of the 2215

4th year switch to straight line with life od 2.5 years on remaining basis of 638= 255 or 11.52% of the 2215

5th year same deprecistion as year 4 = 255

6th year 1/2 of year 5 or 128. 5.76% of the 2215

let's check

sda 8860

year 1 443

year 2 709

year 3 425

year 4 255

year 5 255

year 6 125

total 11075

work around  - for prior depreciation, enter the 443

in the final review, the fact that special depreciation was left blank should be pointed out as needing review.

click on check entries, which should take you to the asset page

now you can enter the special depreciation taken in 2023. it will be the same for regular tax and  AMT tax

line 10 will be 443 line 11 should be the correct amount 709 if my example is correct. 

[gg727272]

Thank you for your response Mike9241.  It's still a bit confusing that there is nowhere to enter the previous SDA until it's shown as needing review during the final review.  Hopefully TT will update this glitch.