Hello,

The first thing I see is Nonresidential real property being setup a Property Type of P which is Personal not Real property. Also, as far as I know, looking at the Depreciation Tables from the IRS, there is no such thing as MF150 with a 39 years life.

I would start with changing the assets to Property Type to R, MF100 and 39 years, answering Yes-Placed-in-Service date to the questions, and then re-running depreciation of these asset and trying again.

~Delray

After looking at this a little bit more - the issue is the Property Type P on a 39 year Asset. The P on a 39 year asset would appear on Line 2 of the 4562 as being qualified for Section 179, it is just the YTD amount not appearing on Line 19i. The Property Type P just does not fit the criteria to appear on Line 19i but changing the Property type to R the asset no longer is qualified for Section 179 and does put a YTD number for the MF150 assets on Line 19i.

After coffee and thinking about it, it does make sense that the Depreciation and 4562 would differ in that way. 

To add more background to these specific assets: All 7 are Alarm/video security systems that have been installed onto our building. When I added them, I followed the 2019 FAS Assets Setup Key worksheet that our tax representative sent us at the beginning of the year. (he adjusts it each year).

On the worksheet it shows that Video Systems (Installed onto building) should be recorded as:

Asset Group: Signs/Cameras
Property Type: P
Property Tax: Y
Tax estimated life: 39 years
DPR Method: MF150
179/168: None

Internal Estimated life: 5years
DPR Method: SL
179/168: none

State Estimated Life: 39 years
DPR method: MF150
179/168: None

That is why I have it recorded as such and that's why I am confused about the Tax rep's request to exclude it.

I feel like the depreciation reports are accurately reflecting the correct figures as the depreciation total includes the depreciation pulled for all of the items but the Form 4562 is not including the depreciation pulled for those 7 assets at all.

I will try what you suggested and see if that clears everything up.

I still see the MF150 as an Invalid Method for a Property Type R asset, but I am not an accountant and the program will allow it.

So should I just change the property type to R and leave it as MF150 39 years? And see if the 4562 Form will then include those items and reflect the correct amount of YTD depreciation pulled for 2019?

My Depreciation Expense reports and Tax Expense Reports match exactly when it comes to the total depreciation amount, the only difference between totals that is appearing is on the generated Tax form. (as it is $1,851 less than the totals on my other two reports)

Our tax rep wants all totals to match - so the Form 4562 needs to go up or the Depreciation total on the DE report needs to go down. 

Hi, Rgalvan!

It may be helpful to know that the following is deemed Qualified Improvement Property (QIP) if placed in service after 2017 and installed to a nonresidential building already placed in service:

• Roofs.
• HVAC equipment.
• Fire protection and alarm systems.
• Security systems.

And thanks to the CARES Act of 2020, QIP now enjoys a 15-year recovery (over GDS), and is also eligible for bonus depreciation.  QIP is still coded as Real property (R) and depreciated over MACRS 100, not 150 as you had indicated.

Check out Carl Thompson's excellent Blog article entitled "Breaking News" which was published on this website last March.