US Depreciation Question

Tax Topics
1

I have a client that I picked up with Rental assets that was set up as 7 year SL HY with a cost of $2,500 Jan 1, 2011. I got the prior year depreciation pages and it looks like their tax program was calculating it at 7 years declining balance rather than straight line. For example - the first year was depreciated at 7.16% (1/14th - makes sense given half year rule) and each of the next 6 years were depreciated at 1/7 (14.3% roughly) and I can see how the depreciation claimed to date was $1,580 at the end of 2017 as calculated by the prior accountant. There was $179, $332, $284, $244, $209, $179 and $154 claimed from 2011 to 2017. How would I calculate the 2018 and 2019 depreciation? Since it is straight line I would have expected it to be fully depreciated in 2018 with only a little bit remaining to be depreciated in 2018. As there is $920 remaining to be depreciated in 2018 and future years I am not sure what to do. Should I continue to depreciate it at 14.3% declining balance? Am I missing something or did the prior accountant do something wrong? When I typed in the building at 27.5 SL/GDS MM it calculated the correct depreciation that makes sense given the prior years but the appliances in the 7 year category does not and I can’t figure out why. Any help would be appreciated.

2

This is a forum for TaxCycle, which is used for preparing Canadian income tax returns. Your question is exclusively a US tax return question, not Canadian.

While there are some here who do prepare US tax returns, I would have a concern with raising this topic here as it may be interpreted as direction for a Canadian tax return, even though you have clearly identified it otherwise.

I would like to suggest that this question be raised on a forum focused on US tax issues.

(And a quick answer, for both Canadian and US depreciation mis-categorization issues, you always stick to the depreciation category originally set up, unless the law requires a change. Which it doesn’t here.)

3

“I would have a concern with raising this topic here as it may be interpreted as direction for a Canadian tax return, even though you have clearly identified it otherwise.” Quote from Tim.
For those of us not familiar with US returns, this was Greek - I tried to figure out what Laurie was asking/saying. The initials/shortforms meant nothing.

4

I know and I am sorry but I don’t have any US tax forums to ask on and I do occasionally see US tax questions on here. Anybody that knows about US depreciation enough to answer my question will understand the initial/short form. I was trying to use the same depreciation but I can’t figure out what the heck the prior accountant was doing to be able to continue it… It doesn’t match up with my understanding of how depreciation works in the US.

5

@laurie

It will take you some time and some digging to find something that fits your needs.

Here are some ideas.

The best general online US bookkeeping certification training that I have found so far is through AIPB. The highly regarded Canadian Tax resource site, Bookkeeping Essentials, also seems to validate it’s legitimacy. AIPB membership is very cost effective with membership normally at $60 per year and now at $39 promo price. Individual courses are very cost effective as well. They publish a wide range of guides and produce a series online training courses,

https://aipb.org/membership/

https://bookstore.aipb.org/

Mastering Depreciation, List Price: $59.00, Member Price: 49.00 (at checkout)

There are several comprehensive training and coaching programs for US bookkeeping. In no particular order these include:-

Ben Robinson, Bookkeepers Launch.
I have spoken with very successful bookkeepers who have taken both levels of Ben Robinson’s program. They loved it and are very profitable. Ben teaching everything from bookkeeping, to workflows, to practice management. Ben focuses on online bookkeeping. Ben’s community is very supportive and active.



https://www.opportunitychecker.com/bookkeeper-business-academy-reviews-legit-or-scam/

Seth David, Nerd Enterprises, Bulletproof Bookkeeping with QBO


Seth is a wonderful trainer and highly generous and open with his information, resources, and expertise. Seth David’s community is very very active.

Universal Accounting School
Universal Accounting offers bookkeeping programs for both USA and Canada. They offer tax programs directly for the USA and recommend the Knowledge Bureau for Canadian tax training. They have partnered with the Canadian Bookkeepers Association and with IPBC for exclusive discounts.

https://universalaccountingschool.com/tag/canada/
https://universalaccountingschool.com/contact-us/apply-today/

CPA Academy offers both free and low cost paid training. It is free to join. Enter depreciation into the search bar.
https://www.cpaacademy.org/webinars
https://www.cpaacademy.org/selfstudy/RecentlyAdded

For QBO USA training I like Hector Garcia’s paid courses called Advanced Webinars. https://hectorgarcia.com/advanced/
These are resources recommended by Hector Garcia
https://hectorgarcia.com/list/

Free Resources:

You can may wish to join a USA professional tax forum such as the ProConnect LaCerte tax forum.
https://proconnect.intuit.com/lacerte/
https://proconnect.intuit.com/community/lacerte-discussions/discussion/02/201

Paid Programs:

Books:

You can buy a tax guide that covers fixed asset depreciation. Thomson Reuters is one highly regarded publishers of guides and resources for USA tax.

There are lots of tradeshows, online training venues, newsletters, Facebook groups, and more.