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I'm confused with a number that H&R Block online is giving me with regard to depreciation.

I put a dishwasher, which cost $629, in service in June 2010.

On my 2010 taxes I took a 50% bonus depreciation, leaving $314 to depreciate over 5 years using the 200% declining balance with mid-year convention.

So, from what I understand, the correct amount to depreciate of this part each year would be:

Tax Year                     Amount
===================================
2010         0.2000 of $314     $63
2011         0.3200 of $314    $100
2012         0.1920 of $314     $60
2013         0.1152 of $314     $36
2014         0.0691 of $314     $22
2015         0.0207 of $214      $6

The software is bound and determined to tell me that I need to depreciate $36 this year. But, that appears to be last year's amount, not 2014's.

There were places in the interview screen to put in (a) prior-year Section 179 depreciation, (b) prior-year bonus depreciation, (c) prior-year accumulated depreciation. I tried all kinds of combinations to get it to spit out $22, but it wouldn't.

Something with the laws may have changed in between 2010 and now, and unfortunately I didn't use the software the entire time in between, so it doesn't have that information to help it.

I may just end up not depreciating it this year and next. It's hardly worth the small increase in my refund all the time I've spent on it, but I don't want to risk an audit by being over by $14 on my depreciation.

Any insights?

  • Would they really audit you for shortchanging the govt for 14$? – Victor123 Apr 7 '15 at 18:51
  • I don't want to find out. :) – mbhunter Apr 7 '15 at 18:52
  • It wouldn't even be $14 - it would be the taxes on the $14, so probably closer to $4. – David Rice Apr 7 '15 at 19:27
4

second column doesn't equal 1.0. Year 2014 should be 0.1152 of 314. Yes, year 4 and 5 will have same depreciation expense amounts.

Tax Year    %         Amount of Depreciation
2010    20.00%  314   63
2011    32.00%  314   100
2012    19.20%  314   60
2013    11.52%  314   36
2014    11.52%  314   36
2015    5.76%   314   18
       100.00%        314

You can find the table in the Publication 946 from IRS. I hope this helps.

  • It not only helps, it completely answers my question. Thank you very, very much!! (That's what I get for trusting something besides the IRS pubs.) – mbhunter Apr 7 '15 at 23:02
  • If people are looking for exactly why this is the case, it's this line from the linked IRS publication - "You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction." That's how come the last few years have the same depreciation amount, the double declining switches to straight line. – horyd Nov 29 '18 at 22:57

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