turbotax icon
turbotax icon
turbotax icon
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

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

Expense or Depreciate a drone bought and sold in 2020

Bought a drone for business use in June 2020 and sold it in August 2020.  It wasn't a good fit for my business.  How should I account for this purchase and sale on my tax return?

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.

5 Replies
DavidD66
Employee Tax Expert

Expense or Depreciate a drone bought and sold in 2020

I would capitalize it and then report as the sale of an asset.  It will result in a short term capital gain as opposed to ordinary income.

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

Expense or Depreciate a drone bought and sold in 2020

It was sold at a loss of about $500, why will it show as a capital gain?  

ToddL99
Expert Alumni

Expense or Depreciate a drone bought and sold in 2020

If you sold it for less than what you paid for it, then it will be a capital loss.

 

The best way to report this would be to "capitalize it" (as @DavidD66 stated). Enter it in the Business Asset interview of TurboTax Self-Employed (or Home and Business) and indicate that you stopped using it in August 2020.  Any loss on the disposition would be a short-term (ordinary) loss.

Expense or Depreciate a drone bought and sold in 2020

Thank you for the information.  I am reviewing the errors on my federal return.   For this item On the Asset Entry Worksheet,  line H for Elect OUT of Special Depreciation Allowance is marked with a red X.  What does this mean and how do I correct it?

Cynthiad66
Employee Tax Expert

Expense or Depreciate a drone bought and sold in 2020

Because you bought and sold the Asset in the same year, it does not qualify for the Special Depreciation so it automatically checked OPT OUT meaning you will not be deducting that Special Depreciation.  No need to correct that is the correct option.

 

Property placed in service and disposed of in the same year cannot be depreciated.  Remove from the depreciation schedule.  Use this linki for more information

Sales and Other Disposition of Assets

 

 

IRS Depreciation Basics

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies