Special Depreciation Allowance Deduction

[pp32]

I added a business asset to my 2021 taxes. In 2022 I have gave away the asset at $0 charge. I am following the steps on TurboTax, but I keep getting errors when I do my Federal Return review saying I need to fill out Special Depreciation Allowance Deduction and AMT Special Depreciation Allowance Ded. What do I need to put in these fields? 

[ThomasM125]

The special depreciation allowance refers to bonus depreciation you may have taken on the vehicle when you entered it in TurboTax in the year you started using it for the business, 2021 in this case. You could determine the amount by looking on your form 4562, on line 14. The AMT special allowance depreciation deduction would likely be the same amount. If you don't have an entry on line 14, then you should enter $0.

[pp32]

Hi, the asset was office furniture. However, when I look at my Form 4562 from 2021 it is titled "Depreciation Options," and there is no line 14. Not sure what to do in this case for my original question?

[ErnieS0]

What you fill in under Special Deprecation Allowance Deduction and AMT Special Depreciation Allowance Deduction depends on what you did last year.

Did you write off the whole cost last year? Then you either took a Section 179 deduction or special depreciation.

You may be looking at a worksheet instead of Form 4562. That form is titled “Depreciation and Amortization.”

Line 14 will show if you claimed Special Depreciation. If you did claim it in 2021, enter the amount in Special Deprecation Allowance Deduction and AMT Special Depreciation Allowance. If the line is blank you did not claim Special Depreciation.

[pp32]

I wrote off the whole cost of the item last year, which was less that $700. So if this is the case, then what should I do?

[DianeW777]

The appropriate action depends on your situation. The next question would be why you gave it away after expensing it for business.  

1. If it was no longer functional then you can say it was disposed of without a sales price.
2. If you converted it to personal use and then gave it away, then you must recapture the special depreciation amount you used ($700 est) and mark that it was converted to personal use. This same amount (amount you used as an expense last year) would be added as business income under the 'Other Income' category in your business section in this scenario.

TurboTax will walk you through the process once you answer the questions appropriately based on the situation.

@pp32 

[pp32]

Yes, it was no longer functional so needed to get rid of it (did not convert to personal use). Turbo tax walks me through those steps, but I still get the error on what to fill out in these 2 fields. Turbo Tax doesn't walk me through on what to fill out in the below fields and instead shows the errors on the forms when I do my review.

1. Special Depreciation Allowance Deduction

2. AMT Special Depreciation Allowance Ded.

What needs to be put in above fields?

[AliciaP1]

You need to reference your depreciation schedule from your 2021 tax return to determine the correct amounts to enter in these fields.  You should have 2 in your 2021 tax filing, one titled as the Depreciation Schedule and one titled AMT Depreciation Schedule.  There is a column on the form identifying any Special Depreciation Allowance amount taken and that is the amount you should enter.

@pp32