No. Don't just delete. Click the edit button and enter th...

[czrunner]

I have a simple somewhat related question.  Can I delete the assets that are fully depreciated?  That's what I assume the "Delete" boxes in the property assets list are for, but only the "Edit" option is described.  I assume that this would also delete all the long depreciated assets worksheets from the Forms.   (I prefer going through the interview, rather than just deleting the forms.)

[PattiF]

You will not be using the fully depreciated assets for your tax return again. You can delete them if you wish.

@czrunner 

[Carl]

You will not be using the fully depreciated assets for your tax return again.

Not always true. When you sell or otherwise dispose of the asset, all that depreciation has to be accounted for. For example, with a fully depreciated rental asset, when you sell the asset you are required to recapture and pay taxes on all depreciation taken, in the year you sell it.

Whereas in a case where the asset was destroyed or thrown away as an example, you would report it as such and the year you report it, would be the last year you'd need that asset to show on the 4562.

[czrunner]

Thank you for your input, but now I am confused.  The assets I am talking about are improvements inside a rental condo purchased in 2010.  All assets listed in Form 4562 survived their listed life (generally 5 or 7 years, with the exception of the rental condo itself), and are still in use or have been replaced.  The assets are mostly furnishing (new counter tops, carpet, window treatment, furniture), appliances, and TVs.  I listed our condo expenses without paying much attention to the assets, because due to the high cost of utilities, taxes, insurance and management fees we have never made a profit on the condo rental.  Only the first year I used the Special Depreciation Allowance.  I don't even know what the 200DB/MQ or 200DB/HY in the Method/Convention column means or where exactly it came from.

We are both in our 70s, and don't plan on selling the condo any time soon.  The assets inside the condo are not worth much, and couldn't be sold separately.  Most likely, our children will inherit the condo, but I don't want them to inherit any headaches.   In the future, would it be better if I list only major structural upgrades as improvements?  For the time being, should I just keep all the assets in TurboTax (unless they are thrown out and replaced)?

Thank you.

[Carl]

If you have any assets listed that are fully depreciated, then you need to show their disposition when you sell ***OR*** otherwise dispose of them.

If an asset is fully depreciated and has performed for or beyond it's useful life, and you have disposed of it in any way other than selling it, you need to show that disposition. For example, if you have a TV listed as an asset, it is fully depreciated and it broke at some point and you ended up throwing it out. Work through the asset in the assets/depreciation section and select the option for "I stopped using this asset in 2022" and keep working it through. When you come to the "Special Handling Required?" screen, read that screen so you understand why I am telling you to click YES. Then click YES. (If you click NO, you will be *forced* to enter sales information, and you did not sell it. You threw it away).

That will make your 2022 tax return the last return you will show this asset in the assets/depreciation section. If it's imported next year (it should not be) then next year, you can just delete it.

[czrunner]

I followed your clear directions.  Now the asset is shown in the "Asset Entry Worksheet" as "sold, given away or abandoned" on the date I entered (TurboTax accepted only a date in 2022), and is still present in Form 4562 (Depreciation and Amortization Report).  This may be a minor issue, but my original intent was to simplify Form 4562 and to reduce the number of Forms in my tax return.   I am now tempted just to leave all the assets in TurboTax as is.  Their contribution to the value of the condo is probably negligible in comparison to the appreciation of the condo (building) itself, and should be classified as replacement/maintenance rather than improvements.  Carl, I value your input.  I know that you can't give tax advice, but what is your take on my approach?

[Carl]

Now the asset is shown in the "Asset Entry Worksheet" as "sold, given away or abandoned" on the date I entered (TurboTax accepted only a date in 2022),

That's correct. In order to show it's disposition in 2021, you'd have to amend the 2021 tax return. In my opinion (and we all know what opinions are like), why bother?

and is still present in Form 4562 (Depreciation and Amortization Report).

That to is correct, because of the way the MACRS tables are set up by the IRS. For example, if the asset used the mid-month convention and you showed disposition of the asset for any specific day in January 2022, then depreciation stopped on Jan 15th. Therefore, you have a "little bit" of depreciation shown. Otherwise, if the asset way already fully depreciated in a prior year, then obviously it shows no depreciation for the current year.

Now if this asset was disposed of by any means other than selling it, then 2022 will be the last year the asset will (should) appear on the 4562.

Note also in a case of where you removed the asset for personal use, that's "kinda-sorta" not really disposing of it. For example, if you removed a stove from the rental for personal use and installed it in your house, that's not really disposing of it. It's just "removing it for your own personal use". So if later you were to sell that stove, you'd have to subtract the depreciation taken on it in the past from what you originally paid for it. Then if you sold it for more than that, you'd have a taxable gain to report.

Now admittedly so, the IRS doesn't know "how" you disposed of an asset, or if you really did actually "dispose" of it. But still, one has to take care and use common sense. Here's an example.

You put a new roof on the house back in 1996. Here it's now 2023 and you're doing your 2022 taxes. That roof would be fully depreciated. You can't just "delete it" per-se. Well, you can. But if you do and you don't show a new roof as a new asset installed in 2022, I would expect that to raise a few eyebrows. Don't know for a fact that it would. But I would defintely expect it to at some point.

[czrunner]

We don't remove anything in the rental condo from service, unless it no longer serves its purpose, and is beyond repair.  Then it is thrown out or in a rare case donated to a thrift store that either discards it or sells it for a penny on the dollar.   So in the future I plan to identify the discarded assets in the TurboTax using your suggested method, and leave everything else untouched, even if fully depreciated.  Our total expenses are always larger than our rental income, regardless of any purchased assets that must be depreciated.  TurboTax is carrying forward (somewhat mysterious) disallowed rental expense deductions from previous years, including the depreciated items, but it doesn't make any difference in the large scale of things.  The income from the rental condo always ends up as zero.  (And that's O.K. with us; we and our kids enjoy the condo a few days a year, and its market value has increased tremendously.)  Thank you!