Section 179 depreciation

[morrisdavid222]

Publication 946, page 16 says "Rental property does not qualify (if renting property is not your trade or business). I took that to mean it does qualify if renting houses is your trade or business. My client is a real estate professional with around 60 single family rentals. Intuit lets me take the 179 depreciation, but I get an error if any is carried forward from the previous year. Is that not allowed?

[dkh]

Try Pub527 - see if that helps answer your questions

[TaxGuyBill]

What is the error?

Yes, only a "Trade or Business" qualifies for Section 179.  The activity of your client definitely rises to that level, so it is allowed, including carryover amounts.

However, on the 4562 ProSeries automatically assumes that rentals DON'T rise to that level.  So you need to manually override the income limitation on the top of Form 4562 to reflect the income/loss of the rentals.  Perhaps that is the issue that is causing your problem???

If you did not change/override the income limitation on last year's 4562, then it is possible that last year's section 179 is wrong (and therefore the carryover amount would be wrong), so you need to check that.

[morrisdavid222]

Taxguybill,

   Does that mean I cannot file the return electronically (because Intuit gives an error whenever anything is overridden).

   I appreciate your initial answer very much.

   Dave Morris

[TaxGuyBill]

Some overrides don't cause any problems, but when e-filing, you can disable error-checking and it will go through fine. 

[morrisdavid222]

Billtaxguy,

   I didn't know the error checking could be disabled. How do you do that?

   Dave Morris

[dkh]

When you select Convert/Transmit there is an Electronics Filing Options box that pops up....very bottom is the check box for Enable Conversion Error Checking.