legomom922 06:43 PM 03-23-2011
When i am depreciating items in MMK, when I enter an item I want to take the 50% depreciation bonus on, do I just enter it as business use %? or is there a special place to enter these items that I don't about..Do I have to note it anywhere why I am claiming 50% business use vs the t/s%?
TomCopeland 01:42 PM 03-24-2011
The additional 50% depreciation deduction gets claimed on Form 4562 line 14. The first year depreciation for the rest of the item gets claimed on line 19. You don't explain why you are taking 50% depreciation, just do it.
You may be confused about 50% depreciation and the t/s%. If something is used both business and personal, apply the time-space% to determine the business portion of the item. Then apply the 50% depreciation rule to this business portion.
legomom922 06:51 PM 03-24-2011
Originally Posted by TomCopeland:
The additional 50% depreciation deduction gets claimed on Form 4562 line 14. The first year depreciation for the rest of the item gets claimed on line 19. You don't explain why you are taking 50% depreciation, just do it.
You may be confused about 50% depreciation and the t/s%. If something is used both business and personal, apply the time-space% to determine the business portion of the item. Then apply the 50% depreciation rule to this business portion.
Oh ok, so I don't do anything with entering the additional 50%, until it gets entered on the tax form itself? And when I use it, because it says you have to or the IRS will assume it anyway, I am only claiming the additional 50% on the business portion (the t/s% amount). So if the t/s comes out to be' $5, then I get an extra $2.50?
TomCopeland 08:48 PM 03-27-2011
I think you are confused so I'll use an example.
You buy a new sofa for $1,000 and your time space % is 40%.
$1,000 x 40% = $400 the business portion of the sofa that gets depreciated.
$400 x 50% = $200 claim as the 50% bonus depreciation on Form 4562, line 14.
Depreciate the other $200 over 7 years on Form 4562, line 19c over 7 years. In the first year, using accelerated depreciation you get $28.58 ($200 x 14.29%)
Total depreciation for the year = $228.58