Proseries does not reflect consolidate Appropriations Act law change regarding residential ADS recovery period

[MichaelN30]

The Consolidated appropriations Act, 2021 signed into Law 12/27/20, allow Residential Properties put into Service prior to 2018 to use 30 year ADS recovery period (instead of the 40 year period under the 2017  TCJA.) I have an apartment building  that was put into service in 2017 and Proseries is only showing a 40 year period for 2020 deprecation. It should allow 30 year period for 2020. The law in Proseries appears incorrect.

[TaxGuyBill]

I haven't had to dig into this yet ... is this something that you need to use Form 3115?  It seems like it would be.

As for ProSeries not allowing it yet, that doesn't surprise me.  You may be able to do it by using the 'other' depreciation and manually filling in the information of the bottom of the Asset Entry Worksheet.

[MichaelN30]

This for an Electing 163(j) residential Real Estate Owner; I don't believe a Form 3115 is necessary. The taxpayer's  election has been in place for 2 years already. It's a change in the IRS recovery period; not the taxpayer's. Tried manual override; didn't work. Error messages. Probably won't allow efile.

[TaxGuyBill]

It shouldn't be a problem to override the Asset Entry Worksheet.  It turns pink, but it doesn't even show up as a real error in the program.

Overriding the 40 years seems to work fine for me, and it depreciates the current year using 30 years. 

[MichaelN30]

Thanks.

2 points: Just got of the phone with Proseries. 1.5 hours uploaded my file and a pdf of law change. Finally got back the answer that the IRS hasn't yet released procedures yet. They will update program at that time. (I don't know if the IRS will actually issue procedures on this.)

Not sure if I will be able to efile with this override. However, if I cannot, it is a significant enough difference. I will paper file if necessary. 

[TaxGuyBill]

You should be able to e-file fine if the override is only on the bottom of that Asset Entry Worksheet.  If for some reason it has a problem, you definitely can e-file if you disable error-checking when submitting the e-file.

[MichaelN30]

Thank you.