Is the "Let's Check Your Five-Year Property Depreciation" a bug? How do I resolve it?

[vsanghvi]

I get a screen titled "Let's Check Your Five-Year Property Depreciation".

The text is that "We noticed that you want to take special Economic Stimulus depreciation on some of your five-year depreciable assets and regular depreciation on the rest.".

Digging in, I have depreciation for a rental property and job related expenses. Looking at the printed out return, the only reference I can see is in the "Car and Truck Expenses Worksheet 2021" for my rental (which doesn't have any special election checkboxes checked) and there's an attached "Special Depreciation Allowance Elections under IRC Section 168(k)(7)" that says I elected to take a depreciation on a "5 Year Property" (I've tried to delete this form but it never works).

Of the two places it asks it me to edit, no references are made to any special election. Is this a bug with turbotax or am I missing something?

[KrisD15]

To clarify

Did you put a vehicle in service (start using it for business) in 2021?

What amount of depreciation is showing for that vehicle for 2021?

[vsanghvi]

> Did you put a vehicle in service (start using it for business) in 2021?

Yes

> What amount of depreciation is showing for that vehicle for 2021?

Line 38 of Car and Truck Expenses Worksheet shows $256 (put into service 5/29/21)

Btw, I ended up taking the standard vehicle deduction of $1400, so I'm not even sure this depreciation affected my deduction. 

[DaveF1006]

Yes, if you have taken the standard mileage deduction, the depreciation amount shown does not affect your deduction.

[vsanghvi]

Can I safely ignore the warning about the 5-year property depreciation? It's actually hard to get back to this warning and it doesn't show up in the audit (I have to go through income and deductions and then sometimes it shows up after that). I just don't want my return to be rejected.

[PatriciaV]

Before you ignore this message, please review your vehicle entries to be sure you entered a description as well as the other requested information. If everything looks good, and TurboTax will let you proceed to file, you can ignore the message. The program is basically asking you to confirm this election, which should not affect the outcome of your tax return.

[vsanghvi]

I've gone through everything I can think of and made sure the entries are complete and correct.

Still, turbotax is saying as part of this warning that "The IRS says you must treat all 5-year assets the same. This means you must either take special depreciation or elect to take regular depreciation on all these assets."

Is there anything I can check on the printed return that I'm not doing anything that'll be problematic?

As an aside, it's unfortunate that TurboTax give me this warning (inconsistently), and then also makes it difficult to resolve. The fact that neither flow that it suggests I fix even provides a reference to any sort of special depreciation election is also frustrating. It would be appreciated if this flow's CX was addressed to help with these issues.

[vsanghvi]

Also, I should note that "Special Depreciation Allowance Elections under IRC Section 168(k)(7)" in my printed return lists the property with the special depreciation as "5 Year Property", but this is never referenced anywhere else in my return. Is there a way to understand specifically what this is referring to? Is this a bug?

[JamesG1]

In TurboTax Online Premier version, I was able to enter two asset purchases (not vehicles) reported as five year depreciable properties.

For one asset I claimed 100% special depreciation and for the second asset I claimed 200 decline balance depreciation over five years.

The statement that is included in the tax return printout states:

Taxpayer hereby elects under IRC Section 168(k)(7) out of having Qualified Economic Stimulus property for the following asset classes placed in service during the tax year ending 12/31/2021.

Is this the statement that you are seeing?  168(k)(7) allows a taxpayer to elect not to deduct additional first year depreciation for all qualified property that is in the same class of property and placed in service by the taxpayer in the same tax year (Code Sec. 168(k)(7) election).  This statement is discussed here.

In my tax return, I am able to electronically file.  Are you experiencing any error messages that will not allow you to electronically file?

[vsanghvi]

That is the same statement I'm seeing, although don't know where I have opted for this.

For yours, are the assets listed names that are recognizable or just "5 Year Property"? The reason I ask is the only reference I see in the rest of the tax return is related to my vehicle. I did add another asset on 5 year depreciation, but when I tried just deleting it, I still got the warning, so all signs pointed to my vehicle being the issue.

I was trying to resolve this before filing, but at this point, not really sure what to do so may just try filing.

[Critter-3]

You CANNOT take the election for one 5 year property and not for the others ... ALL 5 year property MUST use the same method so choose one and change the election on the other.  

[vsanghvi]

So I think I found my issue - it wasn't the vehicle, it was the other item that I thought didn't matter because I tried deleting it.

I had selected "I'll spread the deduction over several years." for this item (which was recommended and preferred by me), but choosing "I'll take the 100% special depreciation allowance." doesn't add the extra form to my document and can't retrigger warning. This is confusing behavior given the language of options + result, but I think get's me past TurboTax's warnings.

[vsanghvi]

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@Critter-3 wrote:

You CANNOT take the election for one 5 year property and not for the others ... ALL 5 year property MUST use the same method so choose one and change the election on the other.  

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I think the problem is I never explicitly selected the election for my vehicle. So I'm unclear on how to change this. But I think I was able to resolve this from above.

[JamesG1]

What I see only states "5 Year Property". 

The nature of these disclosures is to declare to the IRS and, in some cases, have statements prescribed by the Revenue Procedures.  The intent of the IRS is not to list the individual assets involved.

[STYLISHLIVING]

If i took the 100% special Economic Simulus depreciation for all assets I put inplace last year (2021), can I change to 5-year method depreciation for assets I put inplace this year (2022)? 

I am not sure why I also received the warning when all my 5-year assets are depreciated using the 5-year depreciation schedule for 2022. But I did took the special 100% depreciation for 5-year assets purchase in 2021. Is that why? And can i change the depreciation schedule from year to year with different schedules?

"ALL 5 year property MUST use the same method so choose one and change the election on the other. "