179 recapture separate statement

[toddrub46]

I have 179 recapture on 2 listed properties and 1 other 179 property due to reduction in business use - changed to personal use. This will be reported in Part IV of Form 4797 Sections (a) and (b), lines 33-35. The instructions to form 4797 state that if you have more than one property subject to 179 recapture you should attach a separate statement to the return showing the calculations.  Is there a pro-forma statement somewhere in TT which I can fill out? And if not, how would I complete one and get it attached to my return in TT?

[Anonymous_ · Accepted solution]

There is a blank form in the desktop versions of TurboTax that you can certainly use for that purpose.

However, it does not appear to be known whether that form will be transmitted along with the rest of an e-filed return. If you use that form, you might want to consider printing and mailing your return along with the attached blank form.

[toddrub46]

Thank you for your response, but where in TT do I find the "blank form" you mentioned? And is there no way to attach it to the return so that it is e-filed with everything else? I'd hate to have to file manually just for this reason.

thanks

[Anonymous_]

You have to use Forms Mode.

You will have to print and file your return if you need to include the blank form.

[toddrub46]

Ok, thank you. 

[toddrub46]

Thanks for your help on this. As a follow-up question on this issue, the rules say you add the recapture amount reported as other income (which I have done on Schedule C) to the basis of the property. How in TT would I do that so my Form 4562 asset balances are correct going forward?

[ThomasM125]

The property is already listed at cost in TurboTax, so you would need to change the depreciation method to eliminate the section 179 choice. You can do this by deleting the asset and re-entering it and not choosing the section 179 option. Turbo Tax will calculate the current and future years depreciation based on the date you put the property into service and the cost of it. You will be asked to enter the accumulated depeciation from previous years, and that would be the amount reported in those years less the recapture amount.

[toddrub46]

Thanks, I’ll give that a try

[toddrub46]

I have tried this over and over again - both with and without the 179 deduction from prior years and I cannot make it work. The asset was removed from service in 2022 (not sold) if that makes a difference; seems like that would result in one-half year depreciation in 2022. Anyway, if I'm thinking about this correctly it seems as if the final remaining basis as the end of 2022 should be the depreciated basis, as calculated initially ( as though this was an ordinary year with no recapture), PLUS the recapture amount, LESS the additional depreciation of the increased basis due to recapture being added to basis.  

I think I know what the answer should be, but I cannot the TT system to give me that answer. 

Any thoughts or suggestions would be appreciated. 

[ThomasM125]

What you do with section 179 depreciation recapture is restore the basis of the asset to what it would have been if you hadn't taken the section 179 depreciation. That being the case, if you were to delete the asset and re-enter it and indicate that no section 179 depreciation had been taken on it, you would have the correct basis reflected in the current year.

[toddrub46]

Thanks. That’s what I was trying to say but you said it much better. Anyway I’m pretty sure I know what the answer should be by doing a side calculation, but so far I haven’t been able to get the TT software to get me there.  But I’ll keep working at it. Thanks again.