What is special depreciation (also called bonus depreciation) and how is it calculated?
The program automatically computes a special depreciation allowance for property placed in service in 2020 when the asset has MACRS depreciation method of 20 years or less. See Form 4562 instructions for Line 14 for more information.
To override this, use the Special depreciation allowance: 1=yes, 2=no[O] field in the Depreciation input screen.
- For qualified improvement property (QIP) of 39 years placed in service before January 1, 2018 enter 1 to calculate special depreciation allowance.
- Enter a 2 to shut off the allowance if the property does not qualify. Enter a 1 to force the program to compute the allowance on other property
Detailed information can be found here, IRS Pub. 946
Special Depreciation State Considerations:
The program automatically calculates states that do not follow Federal special depreciation. To override the state special depreciation, enter an amount or -1 for none, in Current Special Depreciation (State Column). For states with prior special depreciation, enter an amount, or -1 for none, in Prior Special Depreciation Allowance (State Column).
Follow these steps to include an asset not included by default:
- Go to the Depreciation screen:
- Screen 22 (Individual)
- Screen 14 (Partnership)
- Screen 21 (Corporate)
- Screen 16 (S Corporate)
- Screen 27 (Fiduciary)
- Click on the Asset being expensed.
- Scroll down to the Federal Depreciation section.
- Locate the General subsection.
- Enter a 1 in, Special Depreciation Allowance: 1= yes, 2= no [O].
Follow these steps to suppress special depreciation of an asset:
- Go to the Depreciation screen:
- Screen 22 (Individual)
- Screen 14 (Partnership)
- Screen 21 (Corporate)
- Screen 16 (S Corporate)
- Screen 27 (Fiduciary)
- Click on the Asset being expensed.
- Scroll down to the Federal Depreciation section.
- Locate the General subsection.
- Enter a 2 in, Special Depreciation Allowance: 1= yes, 2= no [O].
Follow these steps to override the amount expensed for special depreciation:
- Go to the Depreciation screen:
- Screen 22 (Individual)
- Screen 14 (Partnership)
- Screen 21 (Corporate)
- Screen 16 (S Corporate)
- Screen 27 (Fiduciary)
- Click on the Asset being expensed.
- Scroll down to the Federal Depreciation section.
- Locate the Regular Depreciation subsection.
- Enter the amount in, Current Special Depreciation Allowance (-1 if none) [O].
Follow these steps to enter prior year special depreciation:
- Go to the Depreciation screen:
- Screen 22 (Individual)
- Screen 14 (Partnership)
- Screen 21 (Corporate)
- Screen 16 (S Corporate)
- Screen 27 (Fiduciary)
- Click on the Asset being expensed.
- Scroll down to the Federal Depreciation section.
- Enter the amount in, Prior Special Depreciation Allowance.
Follow these steps to elect not to claim additional special depreciation:
- Go to the Elections screen.
- Screen 46 (Individual)
- Screen 33 (Partnership)
- Screen 41 (Corporate)
- Screen 38 (S Corporate)
- Screen 50 (Fiduciary)
- Click on Election 1 or click on Add from the left navigation panel.
- Locate the Election to Not Claim Additional Depreciation Deduction section.
- Enter a 1 or 2 in, Elect to not claim additional depreciation: 1= Sec. 1400N(d)(2), 2= Sec. 168(k)(7).
