TT calculated a book Gain on sale of Section 179 Asset. But I did not take Section 179 deprec on my books for the asset. My books show a loss. How do i change TT?

Forum|Forum|2 years ago
January 29, 2024
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I have a S-Corp. Schedule M-1 will not let me change the calculated "Book" Gain on Sale.

TurboTax Online

RobertB4444

You need to directly adjust the asset. Go into the asset section and find the asset in question. You will have to make an adjustment to the prior years depreciation.

Make sure that you are certain about your depreciation calculation. The prior depreciation on this asset has been sent to the IRS every year. Changing it in the year of the sale if it has no reason to change would be bad.

@klj102471

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klj102471Author

@RobertB4444

Thanks for the reply! I don't want to change the depreciation on the return. I want the program to understand there is a difference in basis on the return vs on my books. In previous years on the return, I took Section 179 Depreciation, but I did NOT take Section 179 on my books. Therefore, on the return, the asset has a basis of $0, but on my books, the asset has a basis of $5667. In 2023, I sold the asset. TT has calculated a gain on the sale and (because we have an S-Corp), the gain is going straight to the Schedule K. TT is showing the the gain as a permanent difference between the return and the books on the Schedule M-1 -- it is assuming the gain calculated for the Schedule K is the same gain on my books (in actuality, I have a loss on my books). Is there a way to prevent the Permanent Difference from being populated on my M-1? Or a way to let the program know the gain/loss for the asset on my books?

RobertB4444

No. Those aren't your books on that tax return. Those are the books according to the tax basis of all of your assets. The books have to reflect the tax values of all of the assets. They should match what the IRS has.

I would suggest an adjusting entry for your books for this year that gets your asset values to match the tax return values. Call the adjusting entry "Late 179" or something.

@klj102471

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