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Barbara
Barbara, Tax Preparer
Category: Tax
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Experience:  Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
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In TT under "Prior Depreciation" do I enter the accumulated

Resolved Question:

In TT under "Prior Depreciation" do I enter the accumulated prior depreciation from previous years? Last year was the first year I took depreciation on the asset so the prior depreciation is 0. This year, TurboTax carried over the information including the prior depreciation of 0. Should that be the depreciation calculated for last year instead of zero?
Submitted: 11 months ago.
Category: Tax
Expert:  Barbara replied 11 months ago.

Welcome and thank you for giving me the opportunity to assist you with your tax question.

 

The prior depreciation is the total depreciation you took for previous years. If last year was the first year you took depreciation, that amount should be carried forward to this year's tax return.

 

Please let me know if you require further information or clarification on this. Thank you.

Customer: replied 11 months ago.

Regarding prior depreciation in reference to selling a business asset...does "Depreciation allowed or allowable" refer to accumulated prior depreciation over previous years only, or is the current year's depreciation also included? Is the current tax year's depreciation taken into account on another form?


 


I.E.. I took $2000 depreciation in 2011. I sold the property late in 2012. I'm taking $1500 depreciation in 2012. Should the "Depreciation Allowed or Allowable" be $2000 (for 2011 only) or $3500 (2011 + 2012)

Expert:  Barbara replied 11 months ago.

Hi, Phillip.

 

Since you sold the asset, basically what you have to do is "recapture" the depreciation that you took or that was allowed to be taken (whether you took it or not). You have to account for the total depreciation amount.

 

What type of asset/property did you sell? I can send you the link to the IRS guidelines.

Customer: replied 11 months ago.

I sold a piece of residential rental property. Simply put, I need clarification if 2012 depreciation is included "Depreciation Allowable" entry on the worksheet for selling a business property for my 2012 tax paperwork. My instinct is yes, but I don't want to double enter depreciation for the 2012 year if it is accounted elsewhere in the tax forms.


 


Thanks for your help!

Expert:  Barbara replied 11 months ago.

Yes. You would include the 2012 amount when reporting the sale.

Customer: replied 11 months ago.

Just to verify my thinking...on Form 4797 Part I, 2e should be prior depreciation. Part III, 22 should be prior depreciation plus 2012 depreciation.

Expert:  Barbara replied 11 months ago.

Here's the link for the instructions for Form 4797. http://www.irs.gov/pub/irs-pdf/i4797.pdf

 

You start with Part III and follow along through to the Summary of Part III.

Barbara, Tax Preparer
Category: Tax
Satisfied Customers: 912
Experience: Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
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