Question

Section 179 second year

Forum|Forum|5 years ago
March 17, 2021
3 replies
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Wasn't the section 179 election able to be taken a second year? We bought a business truck in late 2019, claimed the full $18,000 max, but I cannot find any place to enter the amount we paid up to $18,000 for 2020 on the fax forms, nor does Turbo tax ask the questions.

TurboTax Home & Biz Windows

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ThomasM125

I think what you mean is you entered a business vehicle on your 2019 tax return and deducted $18,000 of depreciation by taking section 179 or bonus depreciation. If so, you may have additional depreciation to take in 2020 if the vehicle cost more than $18,000. You should have entered the full cost of the vehicle in 2019.

The depreciation in 2020 could be left-over section 179 from 2019, but is sounds like you took the full amount allowed in 2019. If so, then there would be additional depreciation that TurboTax would automatically enter on your tax return in 2020, but it would be less than the $18,000 amount.

You can only take section 179 or bonus depreciation in the year you purchase the vehicle. The amount allowed in that year may not all be used in that year, based on your business income, so you may have some carryover to future years.

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B

bigwoodgolf95Author

Sorry for being confusing, we did enter the full purchase amount, and took the full $18,000 for 2019. We thought there would be the additional bonus depreciation but Turbo tax does not even address that with the questioning, nor will it allow me to enter numbers into the Forms section.

ColeenD3

No, you have already taken the full cost of the truck. There is nothing left for you to depreciate.

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bigwoodgolf95Author

but out of a $60,000 truck purchase, we only got $18,000 for that first year

ColeenD3

So, the value is higher than the $18,000. The balance will be depreciated over 5 years with regular depreciation.

From IRS Form 4562 instructions:

For qualified property (defined below) placed in service during the tax year, you may be able to take an additional special depreciation allowance. The special depreciation allowance applies only for the first year the property is placed in service. The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under the modified accelerated cost recovery system (MACRS).

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htstucco

I failed to take the huge depreciation on the company vehicle in 2019. The 5 year mark will be in 2023.

This years depreciation is only $406. How do I record the difference in the depreciation that can be taken?

Can I record it on the books as a Credit to Accumulated Dep. and Debit towards Retained Earnings. Since I

can't go back and amend that many books. What do I do and how do I record it.

Thank you,

Jan

HopeS

For tax purposes, you would have to file Form 3115 (Change of Accounting Method) in order to tax the missed depreciation from 2019-2022.

Form 3115

@htstucco

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htstucco

Are you sure.... How do I change accounting method to record the Prior depreciate to balance the correct depreciate that should have been taken. I do not want to expense that amount and was wondering could I

record the correct (accumulated depreciation) to my books and put the difference in retain earnings?

Thanks,

Jan