Amortization of Section 167(h) asset

[USA2022]

IRS instructions for line 42 of Form 4562 describe a calculation that would result in $2,500 in 2021 amortization for a Section 167(h) asset purchased for $10,000 in 2021.  What steps should I take so that Turbo Tax will make the correct calculation?

[tagteam · Accepted solution]

You will have to select Intangibles, Other property and then Other asset type when you enter the asset.

Subsequently, you will have to manually enter "2" as the recovery period (in years).

[USA2022]

Thanks.  How do you manually change the recovery period to 2?

[tagteam]

After you make the selections (as indicated in my previous post), you will arrive at a screen where the recovery period is blank.

Simply enter "2" in that screen and note that you need to not select a recovery period in one of the previous screens.

[USA2022]

After I choose, Intangibles, other property, then choose Other Asset Type, Turbo Tax forces me to choose an Asset Class, which is the recovery period.  The lowest recovery period is 3 years.  If i choose straight line, I get $1,667, which is not correct.

If I choose, Intangibles, other property, then choose Amortizable Intangibles, I can then input useful life in years.  If I input 2 years, the calculated amortization is $2,917, which is incorrect for a $10,000 asset.

[USA2022 · Accepted solution]

The following worked

Choose Intangibles, other property, then choose Amortizable intangibles, insert a purchase date of 7/1/2021, and a 2 year useful life.  Thanks for your help.