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F Depreciation Dilemma

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    F Depreciation Dilemma

    Client changed his business activity in 2017 from using horses and equipment on a guest ranch (not enough income generated)- Sch. C, to raising cattle - Sch. F. Do I change the method to 150DB and start with the remaining basis, or do I go on using 200DB. We are not talking high dollars, remaining basis among all assets is about $10,000.

    #2
    If the only change is from 200%DB to 150%DB, then you keep the current asset as-is except for 200%DB to 150%DB. So you keep the original "placed in service" date, keep the original basis, keep the "prior depreciation", and ONLY change it to 150%DB.


    However, does the Recovery Period (number of years) change for anything? That procedure may be different. For example, many farm buildings are depreciated at a lower number of years.

    https://www.irs.gov/pub/irs-pdf/p225.pdf#page=42

    If the farm (the new method) Recovery Period is shorter, then you have a choice: (1) Keep it as-is: Don't change anything, don't even change the Recovery Period. *OR* (2) Re-start the depreciation using the shorter Recovery Period. That means you use the new "placed in service" date, use the Adjusted Basis (Basis after subtracting prior depreciation), and the shorter Recovery Period.

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      #3
      Thanks, that sounds good. I am only dealing with 7-year property, so the only change is to 150DDB. I was concerned I needed to split at the time they started the farming business in spring.

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