This article will help determine why the depreciation isn't flowing to Schedule C, E, or F, when selected on Screen 27, Depreciation, and is instead shown as a statement on Line 9 of the K-1.
Depreciation for an estate return should flow to the beneficiaries/estate as the same percentage as ordinary income.
Per the 1041 instructions, "Depreciation. For a decedent's estate, the depreciation deduction is apportioned between the estate and the heirs, legatees, and devisees on the basis of the estate's income allocable to each."
To reflect the depreciation for a specific client:
- Go to Screen 9, Schedule K-1 Distribution Option.
- Locate the Schedule K-1 Distributions Options section.
- Enter a 1 in Depreciation: 1=in fiduciary, 2=prorate to beneficiary [O].
To reflect the depreciation for all clients:
- Go to Settings.
- Select Options.
- Select the Tax Return tab.
- Scroll down to the K-1 Distribution Options section.
- Locate the Depreciation option.
- Select Maintain in Trust from the dropdown menu.