topic Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax? in Deductions & credits

Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

db9fan — Sat, 20 Mar 2021 17:17:59 GMT

I have a property which has a depreciation schedule with an invalid line item. I am trying to eliminate depreciation for that item going forward. How do I make that adjustment in TT?

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

ColeenD3 — Sat, 20 Mar 2021 19:38:57 GMT

What happened to the asset? Was it sold or replaced? You have to take it out of service.

Don't just delete. Click the edit button and enter the date you disposed of it. This calculates the asset depreciation up until the date you used it and eliminates the schedules/worksheets that no longer apply. Do this for any asset you dispose of in the future.

Then you can add the new washer and begin depreciating it

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

db9fan — Sat, 20 Mar 2021 21:32:22 GMT

The issue is I added this line item as a sub asset to a senior asset, and should not have added it. Therefore, it should never have been depreciated in the first place. So I need a way for it to stay on the worksheet (for tracking purposes), while at the same time eliminating the annual depreciation. I can't see a way to do that on TT. Any thoughts on how to do that?

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

KrisD15 — Sat, 20 Mar 2021 22:26:49 GMT

What is it?

What worksheet do you want to keep it on?

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

db9fan — Sat, 20 Mar 2021 22:54:35 GMT

Schedule E, form 4562

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

db9fan — Sat, 20 Mar 2021 22:55:16 GMT

It's residential rental real estate.

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

db9fan — Sat, 20 Mar 2021 22:59:39 GMT

It's over depreciation that requires form 3115 to remove the error and a 481(a) adjustment to correct the over depreciation over 4 years. But I still need to see the asset on the form 4562 schedule so that filing reviewers can understand why I created "Other Income" for the next 4 years.

Re: Is there a way to adjust the cost basis on depreciating rental real estate on Turbo Tax?

ThomasM125 — Tue, 23 Mar 2021 03:53:47 GMT

You need to file form 3115 which you can do in the desktop version of TurboTax.

In the desktop version of TurboTax, use these menu options to find form 3115:

View
Forms
Open Form
Type “3115” in the query box
Select “Form 3115 Change in Accounting Method” and start with page 1 3

Complete these lines and boxes on form 3115:

Tax year of change: enter current year
Type of applicant: choose what type of entity you are
Type of accounting method change: Depreciation or amortization
Part I, question 1(a) DCN code 7
Answer questions 2 and 3 in Part I
Answer questions in Parts II and III
Answer “NO” to Part IV question 25
Enter the depreciation adjustment amount on line 26
Answer “Yes” to line 27 and check the appropriate de minimis election box entry
Answer question 28
Skip to Page 8, Schedule E “Change in Depreciation or Amortization” and complete that section

Attach form 3115 to the tax return for the year of the change, along with a statement describing the property subject to the change. Include the year the property was placed in service and the property’s use in the applicant’s trade, business or income-producing activity.

Review questions 5 – 7 for additional disclosure requirements. Mail a copy of form 3115 and the disclosure statement to the address in the instructions to form 3115.