turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Event: Ask the Experts about your refund > RSVP NOW!
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

EJHERALD
Returning Member

LLC K-1 Form - Accounting for Section 754 Depreciation for Turbotax Premier Software

I have a question regarding the recording of Section 754 Depreciation for a LLP K-1 form issued to us. 

 

Some background to better inform you.  My wife recently inherited from her father upon his death, shares for a LLP which he and others originally developed.  The Partnership owns commercial real estate which is rented out for retail purposes.  The partnership was formed over 25 years ago, not certain on the exact date.  

 

The K-1 we received from the partnership is fairly straight forward, except the handling of Section 754 Depreciation.  The accountant for the partnership lists the depreciation under 20 AH.  When I plug in the depreciation value under 20AH within  Turbotax, there is no correlating deduction to the taxes owed or in my case to be refunded.  The field as indicated is for information purposes.

 

So the question becomes where to apply the depreciation deduction.  My wife's siblings who also inherited similar shares, say to subtract the depreciation amount from the value indicated  line 2, rental real estate income, thereby altering the original Line 2 amount provided by the Partnership's accountant.  Is this the correct method to account for the depreciation deduction? 

Another alternative I found by navigating through the various features of Turbotax's K-1 suite is possibly to record it under Line 13 - Other deductions which may be a more suitable place to apply the depreciation amount.  Specifically, I found Section 754 Depreciation listed under Line 13 W Other.   When I toggle through 13 W other suite, there is another listing of deductive categories including Section 754 Deprecation.  I insert the depreciation amount in this field and turbotax automatically adjusts the taxable amount.  Is this the correct location to apply the Section 754 Depreciation deduction?  

 

Please let me know which is the correct method to account for Section 754 Depreciation.

 

Ed H.

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

2 Replies
PatriciaV
Employee Tax Expert

LLC K-1 Form - Accounting for Section 754 Depreciation for Turbotax Premier Software

Yes, you have correctly researched the entry for Section 754 Depreciation for this Schedule K-1 in TurboTax. This amount should be entered on Line 13 Code W.

 

The amount does reduce the taxable income, so the alternative treatment is not wrong. But using Line 13 Code W allows better tracking of how the depreciation is used.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
EJHERALD
Returning Member

LLC K-1 Form - Accounting for Section 754 Depreciation for Turbotax Premier Software

Thank you very much.  You confirmed my belief in doing it this way so allows traceability.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies