Puzzled by depreciation calculation

Forum|Forum|3 years ago
March 14, 2023
1 reply
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I have a business asset that I've been depreciating with TurboTax since 2017. Every year, the amount of depreciation TurboTax calculates has been exactly what I expected... until now. Here are the details TurboTax has in the forms view (form 4562):

Asset in-service date: 7/27/17
Cost 16,148
100% business use
Depreciable basis 16,148
Life 7.0
Method 200DB/HY

For my 2022 taxes, it reports prior deprecation of 12,545 (as expected) but current depreciation of 1,441 (unexpected).

I plugged my parameters into the depreciation calculator here: https://www.calculatorsoup.com/calculators/financial/depreciation-declining-double.php

And got these results:

Year, Depreciation
2017, $2,307

2018, $3,955

2019, $2,825

2020, $2,018

2021, $1,441

2022, $1,029

2023, $735

2024, $263

Every year from 2017 to 2021, TurboTax's calculation has exactly matched this web calculator, but this year, it wants to depreciate $1,441 again instead of the expected $1,029. Any idea why?

Thank you.

P.S. On a related note, saying this asset has a salvage value of zero (i.e. worth nothing after seven years) is incorrect. I'm not sure I was asked to provide a salvage value. Would it be better to continue depreciating it to zero and then report a gain if the day ever comes to sell/dispose of the asset? Or would it be better to somehow 'abort' the depreciation at this point?

DianeW777

The calculation in TurboTax is correct. And you would not be asked about a salvage value under our current depreciation system.

The rates under 7 Year depreciation are almost exactly the same for year five and six (8.93% and 8.92% respectively). For this reason the depreciation is exactly what it was for 2021.

I have placed the chart below for your convenience.