What to enter for "AMT Special Depr Allow must be entered"?

[uschles]

Hello there,

Some context: I bought a computer in November 2019. Turbotax gave me option of deprecating it. However, now the software wants me to enter a value for "AMT Special Depr Allow" and I have no idea what to enter.

Would greatly appreciate any help!

Thanks,
Udi

[ColeenD3]

How are you choosing to depreciate it? Ove the 5-year useful life or are you taking special depreciation to take it all in 2021? If the latter, your AMT depreciation is probably the same as your regular amount. That would be how much you paid for it.

[uschles]

Thanks for the response! I've picked what the software suggested: That since it's a computer, I should deprecate it over a 5 year period. However, I'm not sure how to use it to fill in the field. If the computer cost (say, $2000) and I got it in November 2019, what do you I enter in that row..?

[DianeW777]

If you choose the '100% special depreciation allowance then TurboTax will automatically use 100% of the cost. Under the bonus rules, if property qualifies for the use of bonus depreciation, it is also exempt from the alternative minimum tax (AMT) depreciation adjustment.  This would meant that the AMT depreciation is the same as regular depreciation as indicated by @ Tax Expert ColeenD3.

If on the other hand you use Section 179 instead of the bonus depreciation, the same rule applies to the AMT depreciation. 

Form 6251 - AMT Instructions

@uschles

[uschles]

Thanks for the response.. I'm more confused though. Sorry for my inexperience: How do I determine how to fill that? Please let me know what I'd need to read up on to better understand this.

[DianeW777]

It depends on your decision about which way you choose to depreciate your computer.  If you know you will have income in the future and want to have some deduction later you can use the 5 year depreciation (known as the recovery period).  If you wish to be taxed as low as possible in the current year, then you would want to utilize all of the expense you are entitled to the year an asset is placed in service.  The first year provides all the choices.

IRS Publication 946 explains all the depreciation methods and allowable recovery periods based on the type of property.  Here is something to keep in mind and I hope it helps. Your computer would be considered personal tangible property.

1. Real Property (anything that is land, buildings and structural components)
2. Personal Property - Everything else - two types
   1. Tangible - anything you can see, feel or touch
   2. Intangible - in and of itself it has no value but represents a value (a dollar bill or a stock certificate, etc)

Please update with any questions you might have. We would need to know how you choose to deduct the expense (Section 179, Bonus or regular depreciation). 

[uschles]

Thank you for the details!