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Being Prompted to Change Asset Type and Class

troy
Level 3

I have imported/rolled forward 2019 1120S to 2020 1120S.

I am noticing that I am being prompted to change asset types from J4 to J5. This is also causing me  to change the Asset Class to "No Entry."

It also looks like there were software updates in 2019 to change asset types from J4 to J5. These updates may have been after corporate returns were filed / the corporate deadline.

Can someone confirm the appropriate way to handle?

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4 Replies 4
TaxGuyBill
Level 14

J4 is for "Qualified Leasehold Improvements".  That category did not exist in 2019, so if the asset was "placed in service" in 2019, you selected the incorrect category.  

If the asset qualifies as Qualified Improvement Property (J5), that is what you should have selected.

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troy
Level 3

So in other words, the asset class was created subsequent to the return filing date, and therefore everyone using J4 will need to make this change. 

It was due to the fact that the bill containing this asset class was not approved until after the filing date, if I understand it correctly.

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TaxGuyBill
Level 14

@troy wrote:

It was due to the fact that the bill containing this asset class was not approved until after the filing date, if I understand it correctly.


 

No, that applied for the entire year.  If I remember correctly, it was the Tax Cuts and Jobs Act that was passed in December 2017.  So it applied to all of 2018, 2019 and on.

Intuit had not programmed ProSeries to 'flag' you with an error if you selected the wrong one (J4), and they may have changed that.  But J4 has not applied to new assets starting in 2018.

Terry53029
Level 11
Level 11

In the 2019 program, there was also a check box on the federal info worksheet about applying the 15 year recovery period to qualified improvement property. If you did not check that box yes, then the asset worksheet would give an error if you tried to put J4