Special Depreciation Allowance Differences

[ddubs82]

Hello,

I am entering depreciable assets on my rental property (personal 2017 - Sept 2023, rental Oct 2023 - current) and for some of the items I am receiving a message that this "asset qualifies for a Special Depreciation deduction.  This may affect your state deduction.  Do you want to take this deduction?" 

1.)  Why is this showing only for some of the 200DB 5 year Depreciated assets?  

2.) Why would you not want to take this deduction?

3.)  In getting more information about the state deduction I am seeing that Wisconsin is one of the states that conformed to the Federal 2008 Stimulus Bonus Depreciation: Special Depreciation Allowance.  What does this mean in how I need to complete my state taxes?  

Thank You

[KrisD15]

1. If an asset is 2,500 TurboTax might take the "de minimis safe harbor" and expense the entire cost the year it was purchased, so that asset would not be eligible for Bonus Depreciation.

2. Passive loss is limited based on your gross income. It is possible to claim Bonus Deprecation and not be able to use it, (although it would carry forward.)

You could take bonus depreciation and then sell which would trigger depreciation recapture which is taxed as ordinary income.

3. If Wisconsin is the state, there would be no adjustment.