WHERE TO I ENTER PRIOR YEARS SPECIAL DEPRECIATION ALLOWANCE TAKEN? I AM A FIRST TIME TURBOTAX USER

[gschumacherinves]

I am not asking for tax assistance, I am asking for turbotax input assistance.

[MarilynG1]

If you are adding an Asset that was not transferred over from a prior TurboTax return, and you know the amount of Special Depreciation Allowance you previously claimed (would be on Form 4562 for first year of service), you could enter the Asset with the original Cost Basis, original date placed in service, and enter the amount of Bonus Depreciation taken as a 179 Deduction.

TurboTax then calculates additional depreciation (based on date of service and balance of Cost after 179 amount) and gives an amount for current year depreciation.  Form 4562 for 2022 will then show the correct Cost Basis for continuing depreciation.

There is no specific place to enter prior year Special Depreciation Allowance taken.  Your Asset Summary will only show 'Special Depreciation' for an asset placed in service in the current year.  However, the 179 Deduction amount will account for the amount of bonus depreciation taken previously. 

Here's more info on Depreciation of Business Assets.

@gschumacherinves 

[farmguy]

Thank you very much, that was helpful.

Where do I enter the depreciable asset information when the state depreciation is different from federal depreciation?

For example, Idaho does not allow bonus depreciation but federal rules do.

thanks again!

[ThomasM125]

You enter the asset in the federal section of TurboTax, and when you complete the state section you will see questions regarding adjusting the federal depreciation to comply with Idaho state rules.

[farmguy]

Sorry to be a bother, I have gone through the state portion (Idaho for me) of TurboTax several times and I cannot find the area where the depreciation adjustments are noted.

Thanks

[MarilynG1]

If you took Bonus Depreciation for an activity that results in a Passive Loss, you need to add that amount back in 'Other Additions'.  It not, no depreciation adjustments are necessary in your Idaho return.

@farmguy 

[farmguy]

Thanks for your reply.

Please allow me to respectfully disagree with you.

My situation has nothing to do with passive losses. There are zero passive losses in my situation.

Federal and Idaho have different depreciation rules when it comes to the special depreciation allowance (bonus depreciation). It is not allowed for the state of Idaho. I would imagine that many states have different depreciation rules as compared to the federal rules.

I suspect that my problem stems from the fact that these are prior years (multiple) depreciable assets that I am attempting to enter (on Schedule E) into turbotax since I am a first-time user.

These assets have been completely depreciated due to the special depreciation allowance on the federal return but not on the Idaho return.

Thanks again for your help.

[MarilynG1]

In response to your earlier question, I did some research.  First, I could find no place in the Idaho State Return in TurboTax to enter this, other than the screenshot I posted. You are correct that many states do differ in regards to Depreciation from Federal rules, but normally there is a specific area to report/adjust this in their state returns.

Second, I could find nothing definitive for tax year 2022 to add back Bonus Depreciation on the Idaho State Tax Commission website. They have aligned/not aligned with Federal rules over different years.  

If the assets were all previously fully depreciated, and no Bonus Depreciation was claimed for tax year 2022, then you would have nothing to add back in to your 2022 Idaho return.  If you added new assets in 2022 and claimed Bonus Depreciation, you could add that amount back in at the screen I posted.  It then shows on 'Other Additions, Form 39R'.

@farmguy 

[farmguy]

For example if you took bonus depreciation on your federal return for a depreciable asset purchased in 2021 there is most certainly a depreciation addback adjustment needed on your 2022 tax return for the state of Idaho.

My question is how do you account for this difference in turbotax?

Again I am new to turbotax and therefore I am entering these depreciable assets into your program for the first time.

Thanks again for your assistance.

[MarilynG1]

If you added an asset in 2021, and claimed Bonus Depreciation, you could add that amount back to your income on your 2021 Idaho return, not on your 2022 return.

You can only take Bonus Depreciation the first year you purchase the asset and use it for Business, so Bonus Depreciation claimed in 2021 would not affect your 2022 return.  

As I stated earlier, I can find no entry to add back Bonus Depreciation, unless the Bonus Depreciation created a Passive Activity Loss, in the Idaho return.

In many states, when an Asset is sold, then the amount of Bonus Depreciation is added back into the Cost Basis, for calculating Gain/Loss on the sale.  This may be the case with Idaho as well.

From the Idaho State Tax Commission:

• Use the Idaho depreciation amounts to compute the Idaho adjusted basis and any gains or losses from the sale or exchange of the property.
• Enter the differences between the Idaho and federal depreciation amounts, and gains and losses from sales or other exchanges of the property on the applicable bonus depreciation line.

@farmguy 

[farmguy]

I believe I have completed my tax return and I am now ready to efile my federal and state tax returns. All issues have been resolved except for one. My one remaining issue is that I cannot get a supporting schedule to print for the state of Idaho. I will be e filing my tax returns, including the Idaho tax return. I followed the instructions, but a pdf copy does NOT show the supporting schedule. The supporting schedule that will not print is for Idaho form 39R, line 21. I followed the instructions, the supporting schedule shows up on the worksheets but not under the information that is filed with the tax return. I am using the desktop version.

Thank you very much for your assistance. Glenn