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Understanding special depreciation in ProConnect Tax

SOLVED•by Intuit•32•Updated March 06, 2023

Below, you'll find basic information about the special depreciation allowance (SDA), how Intuit ProConnect calculates special depreciation, and where to enter the SDA and related elections.

What is special depreciation?

Generally, you can take a special depreciation allowance to recover part of the cost of qualified property placed in service during the tax year.

The allowance applies only for the first year you place the property in service. For qualified property placed in service in 2017, you may be able to take an additional 50% or 100% special depreciation allowance, depending on the date you acquired the qualified property.

See IRS Pub. 946 for a full definition, additional details, and restrictions.

How is special depreciation calculated in ProConnect Tax?

ProConnect Tax automatically calculates the additional first-year special depreciation for qualified assets. Your property is qualified if it's one of the following:

  • Qualified reuse and recycling property.
  • Qualified second generation biofuel plant property.
  • Certain qualified property acquired before September 28, 2017.
  • Certain qualified property acquired after September 27, 2017.
  • Certain plants bearing fruits and nuts.

The program expenses depreciated assets in this order:

  • Basis (reduced by ownership percentage)
  • Less section 179 expense
  • Special depreciation allowance (50% or 100% based on date placed in service)
  • Regular depreciation

How does special depreciation affect state returns?

ProConnect Tax automatically calculates state differences for states that don't conform to the federal special depreciation rules.

To override state special depreciation, enter an amount in the Current Special Depreciation field in the state column.

Where do I enter prior special depreciation?

  1. Go to the Input Return tab.
  2. Open the Depreciation input.
    • For a 1040 return: on the left-side menu, select Deductions and then Depreciation.
    • For a 1041 return: on the left-side menu, select Deductions and then Depreciation.
    • For a 1120 return: on the left-side menu, select Deductions and then Depreciation.
    • For a 1120S return: on the left-side menu, select Ordinary Income and then Depreciation (4562).
    • For a 1065 return: on the left-side menu, select Ordinary Income and then Depreciation (4562).
    • For a 990 return: on the left-side menu, select Expenses and then Depreciation.
  3. Enter any prior SDA in the Quick Entry table under Prior Special Depreciation Allowance.

How do I enter enter special depreciation items and elections in the program?

  1. Go to the Depreciation screen.
  2. Select Details on the asset.
  3. Locate the General subsection.
  4. Enter a 1 in Special depreciation allowance: 1=yes, 2=no [Override].
  1. Go to the Depreciation screen.
  2. Select Details on the asset.
  3. Locate the General subsection.
  4. Enter a 2 in Special depreciation allowance: 1=yes, 2=no [Override], or select the checkbox by the field Elected out of SDA for this property (completing election statement required).
    • Use the former if the asset doesn't qualify for special depreciation, or the latter if the property qualifies but you're electing not to take the deduction.
  1. Go to the Depreciation screen.
  2. Select Details on the asset.
  3. Scroll to the Regular Depreciation subsection.
  4. Enter the amount in Current special depreciation allowance (-1=none) [Override].
  1. Go to the Depreciation screen.
  2. Select Details on the asset.
  3. Scroll to the Regular Depreciation subsection.
  4. Enter the amount in Prior special depreciation allowance.
  1. Go to the Input Return tab.
  2. From the left of the screen, select Other and choose Elections.
  3. Locate the Election to Not Claim Additional Depreciation Deduction section.
  4. Enter a 1 or 2 in Elect not to claim additional depreciation: 1=Section 1400N(d)(2), 2=Section 168(k)(7).
  1. Go to the Depreciation screen.
  2. Click the blue Misc./Sec. 179 [O] link at the top right of the screen.
  3. Locate the Miscellaneous Override section.
  4. Mark the checkbox Elect out of SDA (bonus) for all eligible asset classes and automatically generate the election statement.

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