Rebuilding Depreciation Schedule

[taxes---taxes]

I have a new client whose depreciation was butchered. They rented 50% of their property from 04 to 2012 and then 100% from 2013 to present. I want to split the asset in 2 showing the 50% from 04-12 and then the 100% from 2013. That should account for all of the depreciation year to date. Proseries won't allow me to dispose of the 50% asset as of 12/31/12 however. Any ideas how I can do this better? Should I just simply enter a single number for the prior depreciation taken up to 2024 and then depreciate as normal from 25 on?

[IntuitAmyC2]

The split entry is a great idea with one modification. I would do the 50% from 2004 and continue using it. I would do a second entry of 50% starting in 2013. This gets you the correct depreciation and keeps the records clean. There is nothing wrong with the 2 parts since they equal a whole. You can use a single line entry, just be sure to enter the correct depreciation taken and verify the remainder is correct. I tend to be more cautious and think what is easier for me to explain and defend. The two entries are an easy defense.

You said butchered depreciation. You may need/ want to file Form 3115 for a change in depreciation. If the house was under- depreciated, you could take a catch up deduction in 2025. If they over- depreciated, you have to spread the correction over 4 years. 

[TaxGuyBill · Accepted solution]

If you were preparing the 2012 return, yes, I would split it.  But assuming you are starting off with preparing the 2025 return, I would just enter it as one asset with the total prior depreciation.

I would also scroll WAY down to the bottom of the Asset Entry Worksheet and check the box to use the IRS depreciation 'Tables".

[taxes---taxes]

Thanks and they also started depreciating the property 1 year earlier so I plan on filing 3115 and then correcting the in service date with 2025 filing.