Decoupling Modification

[nancysue]

I have a K-1 from an LLC in which I am a member.  It includes, under  "Additional Information/Decoupling Modification Details (form 500DM)", an amount labelled "Depreciation Adjustment (Line 1)".  This was not covered by TurboTax.  Do I do something with this?  (this is in regard to a roof repair on the building our LLC owns.)

[MaryK4 · Accepted solution]

The decoupling modification is for Maryland Federal Section 179 depreciation deductions taken for a tax year beginning on or after January 1, 2003. For Maryland tax purposes, a taxpayer only is allowed to expense up to $25,000, reduced dollar-for-dollar by the amount over $200,000, of the cost of Section 179 property that is purchased and put in service for a trade or business for the tax year. 

In TurboTax, in the FEDERAL TAXES section where you entered the Schedule K-1, the entry for the Section 179 deduction is on Line 12 for a Partnership (1065) or Line 11 for an S Corp. (1120S).  The next screen in TurboTax asks about the state adjustment (see below, example is an SCorp K-1).  If you had Maryland selected, TurboTax will have made the adjustment in the state section. 

You can go back and check the K-1 entry if you are not sure.