Knowledge Base

13159: Depreciation Basis is Less Than the Cost of the Asset

Fed Returns Generally

The assets that were acquired during the tax year are showing a depreciation basis less than the actual cost of the asset?

When you enter a qualified asset placed in service in the current year, the software will calculate bonus depreciation and cause the depreciation basis to show as less than the cost/basis of the asset (on the FED~DEPR, Depreciation Detail Listing, in View/Print mode). 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.

To keep the program from automatically calculating bonus depreciation, go to Screen 10, Additional Depreciation Elections and select To elect out of bonus depreciation for ALL classes of property, mark this box at the top of the screen.

If you want to limit the bonus depreciation to specific properties based on the life of the asset, check the Elect out of bonus depreciation box (0% box in Drake17 and prior) next to the applicable property type(s) in screen 10.

Screen 10 is located under Depreciable Assets on the Income tab.

For more information on how Drake Tax treats bonus depreciation, see Related Links below.

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