Potential depreciation calculation error for truck under 6000 pounds

[Je9]

Client bought a truck under 6,000 pounds in Nov 2018 for around $32K.  In 2018 he took $10K sec 179 and $8K special leaving a basis of around $13K.   2019 proseries professional shows 0 depreciation for 2019, 2020, 2021, 2022, 2023 and then depreciation in 2024, 2025 and 2026 to take the basis to 0.  That seems wrong.

In 2018 proseries professional program shows depreciation should be around $4K for 2019, $2K for 2020......  which fits with what I would have thought should happen.  Is this a program error or am I misunderstanding how it is supposed to be calculated.

[TaxGuyBill · Accepted solution]

Assuming you did NOT elect out of Bonus in 2018, the program is correct.

Section 179 should NOT have been taken.  You may want to amend to remove that.

In a nutshell, the 100% Bonus depreciation allows the full $32,000 in 2018.  But then the Luxury Limits kick in to limit it to $18,000.  But the Luxury Limit rules move the unused Basis of $13,000 to AFTER the Recovery Period.

The IRS came out with Revenue Procedure 2019-13 to 'fix' those weird results, but that does NOT apply if you took §179.  Amending to remove §179 should fix the problem, and will probably end up with the same results on the 2018 Federal return (but it is possibly the State return may change, depending on their rules).

[Je9]

Many thanks TaxGuyBill!!!