Depreciation

[sappy021]

2017 Toyota Sienna – depreciation in 2021 was straight-line half year resulting in an annual depreciation of $5,007 using another tax software. In 2022, the asset is being set up in ProConnect with MACRS 5-year % Auto Limits Applied resulting in only $1,442. The reason for the difference appears to be in the depreciation rate. How do we get the depreciation rate to match what was taken in the prior tax year using a different tax software?

[BobKamman]

It was placed in service in 2021?  Are you showing it placed in service in 2017, instead?

[George4Tacks]

What are you using as the COST OR BASIS?

[TaxGuyBill]

Business percentage in 2021?

Business percentage in 2022?

Over 6000 pounds or under?

Did 2021 use Section 179?

Did 2021 use Bonus?  Or did they elect OUT of Bonus?

What are you entering for the Basis?

[sappy021]

2021 (Other tax software)

Original Cost Basis $33,379

Prior Sec 179 $8,345

Depr Basis $25,034

Prior Depr $4,846

Method: S/L HY

Life: 5

Rate .2000

Current Depr: $5,007

2022 (ProConnect)

Original Cost Basis $33,379

Prior Sec 179 $8,345

Depr Basis $25,034

Prior Depr $9,853

Method: 200DB HY

Life: 5

Rate .05760

Current Depr: $1,460

I should mention the client is Vermont based which follows Federal for Sec 179 but not for accelerated MACRS.

[sappy021]

Vehicle was placed in service May 23, 2017.

[sappy021]

Business percentage in 2021? 100%

Business percentage in 2022? 100%

Over 6000 pounds or under? Under

Did 2021 use Section 179? Prior to 2021, yes = $8345

Did 2021 use Bonus?  Or did they elect OUT of Bonus? It appears they used S/L. How would I know if they elected OUT of Bonus? If they used S/L, does it mean they automatically elected OUT of Bonus? Or should they have filed an election statement? If they did not file, should the client stick with S/L or move to 200DB?

What are you entering for the Basis? original basis is $33,379, however, MACRS depr basis is $25,034. Also refer to my other reply. Thank you.

[George4Tacks]

2021 (Other tax software)

Original Cost Basis $33,379

Prior Sec 179 $8,345

Depr Basis $25,034

Prior Depr $4,846

Method: S/L HY

Life: 5

Rate .2000

Current Depr: $5,007

2022 (ProConnect)

Original Cost Basis $33,379

Prior Sec 179 $8,345

Depr Basis $25,034

Prior Depr $9,853

Method: 200DB HY

Life: 5

Rate .05760

Current Depr: $1,460

I should mention the client is Vermont based which follows Federal for Sec 179 but not for accelerated MACRS.

Why did YOU allow this new software to change the depreciation method from SL to 200DB? 

Your whole premise has been THE SOFTWARE DID THIS TO ME! You need to look into yourself to find the problem. 

[sappy021]

Hello @George4Tacks 

I provided the answers below.

Did 2021 use Bonus?  Or did they elect OUT of Bonus? It appears they used S/L. How would I know if they elected OUT of Bonus? If they used S/L, does it mean they automatically elected OUT of Bonus? Or should they have filed an election statement? If they did not file, should the client stick with S/L or move to 200DB?

What are you entering for the Basis? original basis is $33,379, however, MACRS depr basis is $25,034. 

I would think the depreciation method can be changed to whatever we need it to be. I am skilling up and fact finding - no premise that the software did it to anyone. 

[TaxGuyBill]

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@sappy021 wrote:

How would I know if they elected OUT of Bonus? If they used S/L, does it mean they automatically elected OUT of Bonus? Or should they have filed an election statement? If they did not file, should the client stick with S/L or move to 200DB?

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There would be a separate election statement if they elected out of Bonus.

George pointed out that ProConnect was using 200%DB.  If Straight Line was used last year, you can't change to 200%DB so you need to change ProConnect to Straight Line.