Question

Bug with KY state section 179 deduction

Forum|Forum|3 years ago
March 12, 2023
1 reply
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When going through the step-by-step schedule E rental property section 179 depreciation in the assets section after entering the federal details the software asks what amount you would like to take for KY state specifying that the there is a limit of $100, 000 for all properties including vehicles. It correctly shows what is remaining as you add all the property deductions. It also correctly enters the data into the worksheets and state forms however when I try to e-file it gives an error stating that I need to zero out the KY state section 179 deduction based on the property being residential and not commercial. I looked at the KY rules and called them to confirm that section 179 is allowable irrespective of whether it is commercial or residential up to $100, 000 per year. I have paid to efile however cannot proceed without either removing the allowable section 179 deduction or changing the category from residential to commercial, which in both cases are not an option. I expect that many others would be having the same challenges in KY as well as other states. Please can you fix this bug ASAP so I can e-file on time?

TurboTax Home & Biz Windows

AliciaP1

The IRS has allowances for certain assets used in the rental of residential property that qualify it for Section 179 deductions. Kentucky does not have these allowances and all residential property rental assets must be depreciated over the respected depreciable lives and cannot utilize the Section 179 deduction.

Per the IRS:

Leased property.

Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. This rule does not apply to corporations. However, you can claim a section 179 deduction for the cost of the following property.

Property you manufacture or produce and lease to others.

Property you purchase and lease to others if both the following tests are met.

The term of the lease (including options to renew) is less than 50% of the property's class life.

For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property.

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