Depreciation for 50% Ownership

[tucow]

Why doesn't TurboTax Premier allow for depreciation at 50% when a rental property is 50% owned?

I know answers to posts explain in order to get the right depreciation values I need to enter the asset values at 50%. Why?

Why doesn't turbotax do this? It does the 50% calculation for rental property income/expenses at 50% but not depreciation. 

I looked back at a 2014 turbotax rental property and it had the depreciation (Schedule Worksheet Line 18a column c ("Reported On Schedule E")) **AS 50%.** The checkbox and entry are set at 50%, the values entered at 100% and TurboTax does the rest.

I don't understand why.

[M-MTax]

I think you either need to enter your percentage of ownership in the ASSET section OR enter 50% of the total depreciable amount in that section. 

[Mike9241]

as you can see the % on the income/expense page is blanked out for depreciation. If you enter 100% of the cost and 50% business use on the asset page the depreciation will be correct.

however, there is not enough information to determine if a partnership return should be filed rather than direct entry on schedule E.

[tucow]

Thanks, Just a few thoughts on these answers.

I don't see where % is blanked out on the income/expense page?

Our return has already been done by a CPA. I already know the taxes due. I'm just trying to understand going forward so I can follow along and find out why a mathematical software program can't do this AUTOMATICALLY.

The asset page % is for business usage and it's set at 91.62% for our situation. I tried to change it to 41.62% and changed the asset to 100%. The result changed the taxes due by a few dollars and that was just one asset that's being depreciated. So, I assume that doesn't work.

I'm not familiar with partnership filing. I assume that's not an issue because our new CPA is not doing that and our past CPA hasn't for years. 

I'll mess around with this depreciation issue more later.

[tucow]

A few more thoughts on a 50% rental property ownership for depreciation calculations. I've done this both ways.

1. I entered all income/expenses at 100% and had TurboTax  split that 50% which it will do if you tell it to. I then entered all the assets at 50% of their costs and had TurboTax calculate the depreciation. This works.

and

2. I entered all income/expenses at 100%, DID NOT have TurboTax split it. Then I entered all the assets at 100% of their costs and had TurboTax calculate the depreciation. This gave me an answer as if I was the sole owner.

Because I'm actually a 50% owner I then overrode my Schedule E Worksheet Line 22 (Deductible rental real estate loss) by 50%. This changed Line 25 (Losses) on Schedule E and resulted in Line 26 (Total rental real estate and royalty income or (loss)) of Schedule E results in the correct figure for this return. This in turn had my 1040 Line 8 resulting in the correct number. This gave me the correct result for a 50% owner.

Number 2 might seem long winded but only required one change, and I didn't have to recalculate all my assets costs or double check the depreciation tables.

Unfortunately I can't efile number 2 with the IRS because of the red exclamation mark. It sure would be nice if I could since everything is entered in the actual figures. There must be a reason it's not done this way, I just don't know what it is. I also don't know why the software the pros use can do this but TurboTax doesn't.

Just thinking out loud here.

[Mike9241]

overrides prevent e-filing. You have in effect voided the TurboTax accuracy guarantee. I doubt the IRS will understand why you overrode line 22. that number will not match form 8582. line 11.  whether this could result in other lines on your 1040 being misreported is unknown. 

you'll have to wait to see if the IRS sends you a notice which I think is likely.  we don't know who the other owner is, but this style of reporting could raise the issue of whether a partnership return was required. if the IRS determines one should have been file, its late and penalties for late filing are abouyt $400/month (2 partners)/for up to 12 months.