Incorrect Depreciation Calculation - TT Business 2023

Forum|Forum|2 years ago
January 19, 2024
3 replies
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Asset value $4,756. Asset life 15 years. Using MACRS SL depreciation method. Asset in year 2 of its life. TT Asset Life History report shows $317 per year depreciation - I agree. Form 4562 shows $323. Seems wrong - should be $317.

AmeliesUncle

What did you enter for "prior depreciation"?

Was it 100% business use both last year and this year?

Rick19744

Employee

Don't forget that depreciation is determined based on the quarter it was placed in service.

While the MACRS tables also support the $317 regardless of the quarter the item was placed in service, TT may be using an actual mathematical equation to arrive at the figure, hence the $5 difference.

You would think the two would agree, but don't know how each figure was determined; two separate calculations? We will never know.

I wouldn't get too excited over the $5 differential, however, your response to @AmeliesUncle may have some bearing.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

Carl11_2

Employee

Some things that matter here:

What date did you place the asset in service?

What convention did you use the first year? Mid-Quarter? Half-Year? This is what really matters.

Rick19744

Employee

@Carl11_2 that question was already addressed.

Regardless of when it was placed in service, 2nd year depreciation would be $317 according to the tables; 1/2 year, 1st quarter, 2nd quarter, 3rd quarter and 4th quarter. All are 6.67% resulting in $317 depreciation.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

Carl11_2

Employee

I'm just wondering if "rounding" may be the cause here. But even so, a $5 difference on a single asset in it's 2nd year (which is 1st full year) seems quite a bit to me - considering the cost of the asset. Now, I have no problem with a maximum $5 difference, and for me I'd leave it alone. But a $6 difference and I want answers.
I know on my rental properties I'll see a few dollars difference, but never more than $5 and never exactly $5. Typically, $2 or $3 and that's it. I just "Let it go". Heck, on the real estate property itself I'll not give a $5 difference a 2nd thought. But $6? I'll print out the worksheets to see exactly what numbers the program is working with. 100% of the time, it's because I entered an incorrect figure somewhere.