Depreciation

[Joe6]

Have a quick question. I have what i suppose would be a "luxury auto" 2017 Porsche. It is used in the business. Purchased in 2022 and we used both 10000 of  the 179 and Special Depreciation Allowance of 9200 in 2022. I reviewed the entry this year and noticed no depreciation is listed for this year. The Asset History shows no depreciation for this year but shows depreciation beginning in 2029. Just not familiar with this. Any Thoughts

[TaxGuyBill]

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@Joe6 wrote:

used both 10000 of  the 179 and Special Depreciation Allowance of 9200 in 2022.

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Why did you use both???

Using both is what caused the problem.  Sort of.

The Luxury Limits have some weird rules that can sometimes delay some depreciation until AFTER the usual five year Recovery Period (in your case, it should be 2028).

Then 100% Bonus depreciation made that weird rule REALLY bad, so the IRS created a work-around rule to counter act that (although I can't think of why they would have the authority to create that rule that counter-acts the law).

However, that work-around rule does NOT apply if the taxpayer also takes Section 179.  Taking both Section 179 and Bonus is what disallowed the work-around rule, so the rest of the depreciation is pushed to 2028.

It is too late to amend to elect out of Bonus, but I think it is still allowable to amend to remove the Section 179, but I would need to double check that (the end result will usually be the same because it would just use Bonus for that other $10,000).

[Joe6]

Well I guess I did it because I didn't know any better and TurboTax didn't alert me to any potential issue with it. I must say I am not an expert on all of the vagaries of luxury autos. Obviously I screwed it up so I'll just deal with it. I just wanted to know why it did it. It would have been nice to at least have some type of an alert that you couldn't. It's simply allows you the option

[TaxGuyBill]

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@Joe6 wrote:

 because I didn't know any better and TurboTax didn't alert me to any potential issue with it.

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TurboTax?  This is a tax forum for tax professionals using professional tax software, not Do-It-Yourselfers on TurboTax.  As you can see, TurboTax does not inform a person of MANY things and will frequently mess things up.

[Joe6]

Well Bill tax professionals don't know everything about every area of the tax law. I gather you have never made an error thank God we have you to help us less mortals

[Joe6]

We can call it pro series if that helps. 

[abctax55]

@Joe6 

No, that doesn't help.  

Just one question for you..  ARE you a tax professional; using Turbo Tax to prepare returns for clients?

[The_AntiTax_Man]

@abctax55  I think he was just asking for a friend.  (wink wink) 

My guess: It's his car and he's received a NOTICE.