Prior Year Special Depreciation Allowance

[jmedeiros10]

In 2020, I purchased a truck for $32,227 that qualified for full 100% Special Depreciation allowance. I used it 95.33% for business so the total special depreciation I took was $30,722. 

When I go through the interview questions this year, there is no question that asks me to enter prior year special depreciation taken. There is only a question regarding prior section 179 deductions taken and one about prior depreciation (learn more link on this page says DO NOT include prior special depreciation here because it will ask about it next, but it never does ask).

This year the business use of my truck is calculated at 95.56%. When I get to the end, it calculates my deprecation expense for this year as $158. I would like to know how this $158 depreciation expense was calculated. I tried contacting TurboTax live help multiple times and all that I've spoken with cannot explain how TurboTax calculated the $158. 

[ThomasM125]

I'm not sure why you were asked about the special depreciation since that would be in TurboTax if you reported it in previous years. You wouldn't need to enter it again this year.

The depreciation may show in the forms and schedules you can print out when you pay for your TurboTax program. It is from assets you entered in the current or previous years. It is possible that you didn't deduct all of the depreciation allowable in the year you purchased the auto, in which case you would have a depreciation deduction for several years associated with it.

You should look for a depreciation schedule or asset worksheet when you print out your tax return, forms and schedules.

[jmedeiros10]

Thank you. When it first transferred the vehicle information from last year, it was giving me approximately 12k in depreciation expense. TT was not taking into account the SDA from last year at all. I contacted Live help and they had me delete the vehicle, add it back and input the info manually. As I was going through the interview, it says it would ask about any SDA previously taken but it never does ask. Therefore, I had to add the $30,722 of SDA in the "prior depreciation" question, although that question says specifically to not add it there. After adding it there, it calculates the $158 of depreciation expense. I want to see if anyone knows how it arrived at that number. 

[ThomasM125]

There should not be any depreciation on the auto from what you describe. If there aren't any other assets in your program that would be the only source of it though. You will need to look at the asset entry worksheet for the vehicle to determine how the depreciation in calculated.

[candourtaxes]

Hi, I have a similar situation, and wondered how would I confirm if this statement you mentioned is true for me on previous year taxes? "It is possible that you didn't deduct all of the depreciation allowable in the year you purchased the auto" Would this apply to Special Depreciation Allowance?

I know my records show (2020 taxes) schedule C that the special depreciation (100% at about 75% business use of vehicle) was taken but I did have a NET LOSS shown on (line31 of Schedule C). Would this allow a depreciation deduction by amortization over 5 yrs to be calculated for the same vehicle on 2021 year taxes (this is what is happening)? Or is this a mistake as the Special Depreciation Allowance amount is showing on line 36i and j (on Vehicle Depreciation Information sheet) , but line 37 shows $0, and it seems to be missing from the Amortization Report (Form 4562) for 2021 tax year. My understanding was when taking the Special Depreciation Allowance, the following tax years would be $0 allowed for depreciation. Is there anywhere I could confirm on worksheets 2020 tax year that I would have an unused special depreciation carried over for 2021 tax year? Please advise or clarify what should be corrected on 2021 tax return and if i should do it manually, how? Or should I delete vehicle and start over with interview process? My data was imported with 2020 TurboTax file. Thanks for the help!