New client. Depr report has rental "placed in svcs use" 8/2/2010 @ 41% "bus use" yet 100% of the property was rented from 8/2/2010. What am I missing?
-
-
Business Percentage
(1) Check the "days of rental use" on Schedule E. Needs to be 365, or blank, or "not applicable," depending on your software. Cannot be less than 365, even if the property was vacant for some days.Originally posted by AZ-Tax View Post
(2) 41% = 5 months. August through December = 5 months. Did you accidentally enter the "placed in service date" as August 2, 2011??
BMKBurton M. Koss
koss@usakoss.net
____________________________________
The map is not the territory...
and the instruction book is not the process. -
I think I see what they previous preparer did..
They marked Sch E as never being used for personal use during the year but started depreciating the property on 8/2/210 but why use 8/2/2010 when you probably should have used 1/1/2010- to start the depreciation. Then that would make sense of 41% bus use. Why didnt they use 100% bus use from 8/2/2010?Comment
-
First year of depreciation
Okay, wait a minute... I misunderstood your question. I thought you were getting an output of 41% business use on the 2011 return. But you're asking why the report for 2010 shows 41%.
I agree that that figure is incorrect.
It does sound like the previous preparer fouled things up in the software, or did not understand how to start depreciation on a new asset. I agree that it should be 100% business use from the date placed in service. You can't use 01/01 as the start date of the depreciation and then prorate it.
Depreciation does get prorated for the first year, but not like that.
The depreciation tables will take the entire basis and use a fraction, based on the portion of the year that the asset was in service. That fraction should be a little less than 41%, because of the mid-month convention.
BMKLast edited by Koss; 03-31-2012, 06:12 PM.Burton M. Koss
koss@usakoss.net
____________________________________
The map is not the territory...
and the instruction book is not the process.Comment
-
Again thanks Professor Koss
So how many stars do I get for being correctOriginally posted by Koss View Post
Can you imagine, the previous tax preparer already amended this return already once just a week ago for I saw a 2nd rental property in the Depr report yet 1 rental on the Sch E.Comment
Comment