topic Depreciation Amount not Matching Prior Return in Investors & landlords

Depreciation Amount not Matching Prior Return

RBFC — Mon, 04 Jan 2021 01:41:12 GMT

First year using TT Business. I have a Rental Property that we have owned since May 2016. It was setup by a previous preparer. The first year was calculated using 179 using 5/12/2016, Basis=111,540, 27.5 yrs S/L. Depr Deduction-$2,535. Next years are $4,056. When I enter all this information into TT, the amount is off by $1,000. do I need to make it match? If so, how do I do that?

Re: Depreciation Amount not Matching Prior Return

Mike9241 — Mon, 04 Jan 2021 01:56:55 GMT

put it simply you weren't entitled to section 179 depreciation on residential real property that was being depreciated over 27.5 years. he didn't actually take it. do not show the depr as sec 179. enter the total from 2016 to 2019 as prior depreciation.

2016 $2535 mid month convention place in service in May 2.273% of cost

2017 - 2019 $4056/year

total all years $14,703

Re: Depreciation Amount not Matching Prior Return

RBFC — Mon, 04 Jan 2021 03:22:10 GMT

Thanks SO much for getting back to me! That worked perfectly! Thanks again! I am getting a msg saying I need to update TT. When I try it says that I am up-to-date. Crazy circle. Maybe they just don't have the updates needed ready yet??

Re: Depreciation Amount not Matching Prior Return

Mike9241 — Mon, 04 Jan 2021 09:53:29 GMT

since the IRS needs to revise forms to account for the latest stimulus and considering it's probably understaffed, there are updates to come. TT allows submitting a return, assuming all forms and schedules contained therein are finalized by the IRS, before the IRS actually opens e-filing (for 2019 late January 2020). If you submit before the IRS opens it just sits on the TT server. if you realize there's a mistake you can't recall the return. Personally I wait until an early date in February before submitting. One year the IRS realized that the capital gain/qualified dividend worksheet contained an error and that caused a mess for both taxpayers and the IRS.

Re: Depreciation Amount not Matching Prior Return

RBFC — Wed, 06 Jan 2021 04:01:20 GMT

Thanks Mike! Do you know much about IRS 3115? My initial return done last year had the accounting method marked as "accrual" and should have been "cash". I have been told that I have to request it to be changed. The form is pretty confusing to me.... Should I call the IRS or submitted a new issue here? Thx

Re: Depreciation Amount not Matching Prior Return

Mike9241 — Wed, 06 Jan 2021 04:35:48 GMT

did you actually use the accrual method? do you have inventory? are annual gross receipts from the business under $25 million? do you prepare financial statements for the business that reflects inventory. if you don't prepare financial statements does your books and records reflect inventory as an asset until sold or are they treated as an expense?

Re: Depreciation Amount not Matching Prior Return

RBFC — Wed, 06 Jan 2021 05:13:51 GMT

Nope. I have two LLC's setup for Rental Properties. All cash basis, no inventory. Just rent collected and invoices paid when received. Thanks!