OPTING OUT OF BONUS DEPRECIATION

Purchased carpenting and flooring for rental property in 2011.  States do NOT allow Bonus Depreciation, so I do not want hassle of tracking every year.   Believe this is 5 year life so NO big deal.   It says I have to attach statement to return giving reason why I elected out.  Tax software is allowing 200% depreciation so plenty for me.
Am I correct?   
 5 year property?  Is it okay to opt out Bonus Depreciation for reason I cited (don't want confusion in future years with State Returns.
Thanks so much
    Cancel
    I don't know about carpet, but the cost of the new flooring is added to the cost basis of the property and is in fact, an asset that should be depreciated. If you do not depreciate it, then when you dispose of or convert the property, you have to take back the depreciation (weather you depreciated it or not) and pay tax on it. So unless you qualify for some type of exception to this  (which you would explain in your attached letter) you can pay tax on the depreciated value later, or you can pay tax on the depreciated value now "AND" later. Keep in mind that that IRS does not care about state tax rules. We're talking about your federal taxes here.
    • Just to clarify the flooring was just granite slabs to be decorative with the new carpeting.  I don't believe it has to be added to the basis of the rental property, just simply set up as a depreciable iitem titled perhaps, improvements.

      My question is it a big deal to opt out of the 100 % bonus depreciation since I need to do two state returns which do not allow bonus depreciation. I recognize the IRS is not concerned over state rules but I do and hate the thought of keeping track of this for the nect several years.
    Cancel
    Contribute an answer

    People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

    1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
    2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
    3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
    4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
    5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.
    Cancel