Incorrect accumulated depreciation when vacation home depreciation not fully allowed

[puravidapto]

Suppose the depreciation is 3k, but only 1k is used to offset the net income to zero due to vacation home rule. Next year, the proconnect software adds 3k to the accumulated depreciation, I think it should be 1k to be added, what do you think?

Someone may say that since 2k is carried over, so it is sort of allowed. I can buy this, but when the home is sold, the carryover amount is not used in the end, the accumulated depreciation is still not adjusted. Any it would be easier just to keep track the actually allowed depreciation because no adjustment is needed this way.

I understand the user community can not fix software bugs, but I would like to get a confirmation this is indeed incorrect result before I send an email to itocare. Thanks. 

[TaxGuyBill]

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@puravidapto wrote:

Someone may say that since 2k is carried over, so it is sort of allowed. I can buy this,

but when the home is sold, the carryover amount is not used in the end, the accumulated depreciation is still not adjusted.

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As long as a carryover exists, the program is doing it correctly. 

You are right that it should be adjusted when the carryover no longer exists. 

However, there is some debate on whether Vacation Home losses disappear upon the sale, or if they can be used when it is sold (similar to the Passive Loss rules).  I suspect that is why the program doesn't do anything to it upon the sale - it lets you decide what to do with it.

[puravidapto]

TaxGuyBill:

Thanks for your reply! Regardless of the debate whether Vacation Home carryover depreciation should or should be allowed on sale, the accumulated depreciation should be adjusted when the preparer treats it as not allowed, but this is not the case in the software, which is incorrect. 

So I infer that the software does not have the consideration that you think it has, it simply extracts the depreciation value from the depreciation and amortization schedule. 

[TaxGuyBill]

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@puravidapto wrote:

the accumulated depreciation should be adjusted when the preparer treats it as not allowed, but this is not the case in the software,

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Does the software actually have a mechanism for you to say "don't allow this" (or "allow this") for the sold Vacation Home?  If not, the software doesn't really know what you are doing with it, which is why it doesn't do anything.

If the software was specifically set up to "allow" or "don't allow" the Vacation Home carryovers upon the sale, it agree, it would need to automatically adjust the unallowed depreciation.

[puravidapto]

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@TaxGuyBill wrote:

Does the software actually have a mechanism for you to say "don't allow this" (or "allow this") for the sold Vacation Home?  If not, the software doesn't really know what you are doing with it, which is why it doesn't do anything.

If the software was specifically set up to "allow" or "don't allow" the Vacation Home carryovers upon the sale, it agree, it would need to automatically adjust the unallowed depreciation.

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The software does know how much is the "regular" depreciation, how much is the carryover depreciation from vacation home, and how much does the depreciation goes to the Schedule E.

[TaxGuyBill]

Yes, but unless it specifically has a "use the vacation home carryovers upon the sale" feature, it doesn't know what you are doing when it is sold, which is why it doesn't do anything.