How do I enter bonus depreciation in Drake Tax?
When you enter a qualified asset on the 4562 screen, the software automatically calculates bonus depreciation based on the date placed in service, method, life, and other IRS guidelines. Generally, bonus depreciation is calculated at 50% for eligible assets, however, assets placed in service after 09/27/2017 can now take up to 100% bonus depreciation. See Section 13201 of the Tax Cuts and Jobs Act for details on the increased expensing amounts for certain business assets.
You can use the following options to change or limit the calculated amount of bonus taken:
- The Bonus depreciation field on screen 4562 to override the calculated bonus depreciation, or
- Entries on screen 10 Additional Depreciation Elections to
- elect out of bonus depreciation for all classes,
- elect to compute bonus depreciation by property class,
- elect out of bonus depreciation for all classes, or
- elect 50% bonus depreciation on assets placed in service after 09/27/2017 (Drake17 only).
In some cases, where qualified passenger auto depreciation is limited, you must make a selection on screen 10 to avoid error message 5891 ENTRY REQUIRED ON ADDITIONAL DEPRECIATION ELECTIONS SCREEN.
Under Prior bonus depreciation, a safe harbor election may be available. For more information, please see Related Links below.
- If an asset placed into service in the current year is not calculating bonus depreciation as expected, review Publication 946 for details on whether or not the asset meets all IRS guidelines for being a qualified property eligible to take bonus depreciation.
- Elections to opt out of all bonus, limit bonus on certain properties based on life, or to elect only 50% bonus apply only to assets placed in service during the current tax year that qualify for bonus depreciation.
- AMT depreciation will be the same as regular tax depreciation for any class of property when the election is made to NOT take the special bonus depreciation allowance as stated in the PATH Act.
- See FS-2018-9 for more information on what types of properties now qualify or are no longer eligible for bonus depreciation.