Why Asset Life History depreciate a 5-year life car over 10 years?

[jj24601]

My company has a tesla car purchased in 2019 and used 100 percent for business. I used 179 election and followed MACRS depreciation method. Car life is inputted as 5 years. I was expecting TurboTax to show 5 years of depreciation on the Asset Life History. However, TT listed depreciations from 2019 all the way to 2031. Can someone explain why this happened?

[Mike9241]

the asset life is 5. but a luxury auto also referred to as listed property such as your Telsa is subject to depreciation limits each year max per year IRC code SEC 280F

2019 $18,100

2020 $16,100

2021   $9,700

2022   $5,760 and every year thereafter

 so if the cost was around $100K it would not be fully depreciated until 2031

[jj24601]

Thanks for the reply. I agree what you said, but this car only cost #55k.  Here is what shows on TT. I agree with year 1 depreciation. The next 5 years deprecations are 0s, which doesn't seem right at all. How this happened?      

[jj24601]

@Mike9241 Am I able to overwrite the current year depreciation amount if the calculations on Asset Life History worksheet don't seem right?

[Usnow2]

I have a related issue with a car purchased in 2018.  The max allowable depreciation was $18,000, so after §179 and bonus depreciation, no allowable MACRS depreciation remained in the first year.  The Asset Life History form however shows an addition $6,130 for the first year (2018) which was not actually taken.  It does not seem we are able to override the values in this form, but how do we correct any values in the Asset Life History, or current depreciation amounts?

[irvinelook]

I have the exact same question/issue as the OP,  can someone confirm the screenshot is the correct behavior? 

Thanks

[Mike9241]

expensive vehicles are subject to the luxury auto limit which limits the depreciation that can be take in any one year. such a vehicle could easily take 10 years to become fully depreciated. look at IRS PUB 946 listed property section. 

[AmeliesUncle]

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@irvinelook wrote:

I have the exact same question/issue as the OP,  can someone confirm the screenshot is the correct behavior? 

Thanks

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Did you use Section 179?  If so, that is likely what is causing the problem.

In the year you first used it for business, did you elect OUT of Bonus depreciation?  You tax return would have a separate statement showing that.

What year was the vehicle first used for business?

Approximately how much did the vehicle cost?

Is the vehicle under 6000 pounds?

[irvinelook]

Hi @Mike9241 , @AmeliesUncle 

The vehicle is a car under 6000 lb, and costs over $50k.  It was put into service for business on the first day of purchase.    I am trying to claim section 179 with bonus depreciation, and it is giving me slightly less than $18k for the first year (90% business use).    And I am seeing year 2-5 with 0 depreciation available in Assest life report and about $5k for year 6- year 12. 

So this vehicle won't have a 5-year depreciation life?  Would it be better not claiming section 179 (and/or bonus depreciation) to if I want to depreciate as quickly as possible?   Depreciating $50k costs over 5 year would be about 10k per year.  That would seem to be better than 18k first year then nothing for next 4 years, right? 

Sorry, I can't make heads and tails of the publication 924. 

[AmeliesUncle]

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@irvinelook wrote:

I am trying to claim section 179 with bonus depreciation,

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That is the problem.  Why are you claiming both?  Pick one or the other.  Either use 179 and elect OUT of Bonus, or use Bonus only.  They should have the same results for the first year.

[irvinelook]

Thank you!  That solves the problem!    Using section 179 I got about half of the $18k deduction first year.  Whereas using the bonus depreciation, I got all the business use portion of the $18k deduction, and the Asset Life History is now showing depreciation for the next 5 years.   I am going with just the bonus depreciation.