I have a Hot Air Balloon I purchased in 2022 for business and personal use. 50/50. It was purchased in my LLC. When entering it into the TurboTax Home and Business, what asset class, and depreciation method would be entered? Also, purchased at the same time was a trailer and other equipment. What asset class and depreciation method would be entered for this equipment?
Thank you
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The issue is that there is not an asset classification this can possibly fall under. After reviewing multiple internet sources and reading this IRS source, i would depreciate this using a 7-yr GDS classification.
IRS states that any property that does not have a class life and has not been designated by law as being in any other class should be considered a 7-yr GDS property class.
Is there not an depreciation class for an aircraft?
Yes there is a class for aircraft. It has a class life of five years under the general depreciation system (GDS) and a six year class life under the alternative depreciation system (ADS). See the image below. Also click the link below for rules that reference aircraft (simply search the publication for aircraft).
@DaveF1006 states that there is no official class life for a hot air balloon and is correct when indicating that a seven year class life should be used for any asset that has no specific class life. You will find that in the same tables.
[Edited: 04/13/2023 | 1:48p PST] @scott8
So what depreciation method should be used for an aircraft purchased in August 2022? Straight, ADS, 200% Declining, 150% Declining?
It depends. If the business use is 51% or more then you can use the maximum allowed which is 200% declining balance using the half year convention. This is the accelerated depreciation under the GDS.
TurboTax will calculate that when the correct options are selected.
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