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Capitalize deprecation expense? Enter assets compute depreciation and not show deduction on return??

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Level 1

Construction Spec Home Builder is required to capitalize all expense. This is the first (short) year in business the one house under construction has not sold.  How do I report this on 4562  in Lacerte. They have purchased equipment . How do it enter the assets in Lacerte and not show a deduction as it has been capitalized. Line 23 did not work for me as expected.

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Level 12

This is a rather odd phrase: "Capitalize deprecation expense"

Depreciation is the same as Amortization, in that they are "value changes over time" on the Value or the asset or the loan balance of a liability. The amount you are allowed to "take over time" is offset as Expense, in consideration for that change.

Think of Construction as "making my own inventory" and that's why all the direct associated Costs are not Costs. They are Investment, or Capital Improvement. They didn't spend money on doors or windows; that is not Expense, because the doors and windows are right there if you look. That is what Capitalize means = putting money into the Asset. Further investments, until this total is your COGS, or Basis for what you now own. And until its use is determined, it isn't depreciating at all.

Their projects do not get the same treatment as their own capital assets (equipment) used for their work, such as Forklift or Truck.

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Level 15

Enter the expenses with a start date and a method=99, then scroll down to the next to last entry BEFORE Automobile and Other Listed Property = Portion of basis attributable to 263A costs and put the same amount there. 

I think that will get the result you are looking for. 

 


ex-AllStar