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I have a client who has a Schedule C that is for a short year (5 months). We need to prorate the depreciation to only claim 5/12 of the total. I have searched the depreciation input worksheets as well as the Schedule C input. I cannot find a check box or field that would let me input that it is a short year. I know I can override the depreciation, but I would rather not have to do it for all the assets.
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by entering the date it was placed in service (or disposed of), the software knows not to depreciate for the whole year.
♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Under normal circumstances, that would be true, however this is a short year for the business (only 5 months). The depreciation for the short tax year should be 5/12 of the total allowed. The date purchased and placed in service are identical. I need it to only take depreciation for the months he owned the business, not for the half-year as normal.
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I've never heard of a short year Schedule C, are we sure that's a thing? The (1040) tax return covers the entire calendar year so it's not a short year return.
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I've seen short year Schedule Cs.
What if the business started in August?
Or was incorporated in May?
If the software won't do it you will need to override the calculation.
The more I know the more I don’t know.
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That's true, however, the depreciation rules state you can only take depreciation for the part of the year you own the business. I realize the rules were written mostly for entities other than Schedule C (this is a single member LLC). I have gone back and forth in my mind about how this should be reported.
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That's kind of how I feel! I hate to override it this year because it will need to be overridden every year till the life is up.