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Laura Susko

Bonus depreciation in version 2016.1

Posted By

We upgraded to version 2016.1 today.  At the end of 2015, we were told this upgrade would reflect the tax law passed in December 2015 that resurrected bonus depreciation.  Unfortunately, the software is still not calculating bonus depreciation on a luxury auto correctly.  Here is our asset:

Auto, purchased 7/31/15 for $36,548.51.  It is new and eligible for bonus.  The asset has been input into Sage as a type "A" asset  with depreciation method MA 200 for tax (and MA 150 for AMT) with a 5 year life.  Business use % is 100.  168 Allowance % is 50.

For 2015 expense, Sage calculate $3,160 of 168 Allowance Amount and $0 Current YTD depreciation.  This is incorrect.  The 168 Allowance Amount should be $8,000 (which is the maximum bonus depreciation allowable on a luxury auto in 2015) and the Current YTD depreciation amount should be $3,160 (which is the maximum allowable regular depreciation on luxury auto in 2015).  Total expense should be $11,160.  Sage only returns total expense of $3,160.

To close our TAX and AMT books for 2015, because the 2016.1 version came out so late, we had to manually alter all of our 2015 luxury auto purchases to fix the depreciation calculations to pick up the additional $8,000 missed on each car.  We were told the 2016.1 update would fix this and would fix the calculation going forward.  I have added a 2016 auto as well and the calculation is still wrong, limiting the expense to only the $3,160.  We now need to go back into the software, delete all the autos put in service in 2015 and reinput them in 2016 as historical assets so we can force the accumulated depreciation to be $11,160 instead of $3,160.

We should not have to spend time manually correcting all the totals in our TAX and AMT reports or having to reinput all of these assets and this is the second year we have had to do so.  The law is very clear----depreciation on a luxury auto for which bonus depreciation was elected in 2015 should be $11,160----$8,000 bonus and $3,160 regular depreciation.

When will this functionality be fixed.

  • 0
    Hello Laura Susko,
    As these automobile assets were added in 2015.x version with the proper base information and reported back the incorrect depreciation amount, after upgrade to 2016.1 the application will not automatically correct itself for these assets.
    We suggest that you do the following steps to correct these assets to reflect the correct information:
    Select the Automobile assets with the incorrect depreciation in asset list view
    Click Depreciation menu and Select 168 Allowance switch
    Select group of Selected Assets
    Select the books that are affected
    Put in fiscal year end for 2015 in the date section in the dialog box
    Select Do Not Take 168
    Click ok

    Still have the assets selected in the asset list view
    Click Depreciation menu and Select 168 Allowance switch
    Select group of Selected Assets
    Select the books that are affected
    Put in fiscal year end for 2015 in the date section in the dialog box
    Select Take 50% 168
    Click ok

    After this is done you can check the assets and they will appear with the 168 bonus of $8000 plus the allowed depreciation amount to arrive at the allowed limit for Luxury Automobiles in 2015.
    You will have to re-run depreciation on these assets to the end of the year to reflect the correct amounts for depreciation on the report.
    Please let us know if we can be of further assistance.

    ~ Lovisa
  • 0
    Laura,
    Could you provide us with more information about that asset record? I added a sample asset into my 2016.1 release single user Depreciation software and it came up correctly as $11,160.
    ~Lovisa
  • 0
    I will try the fix for the 2015 autos.

    However, I have a 2016 auto. I just input it today, running 2016.1 and calculated depreciation through 12/31/16. It's wrong. The 168 amount is showing as $9,976.92 and the current YTD is showing as $1,183.08. The 168 should be $8,000 and the Current YTD should be $3,160. The TOTAL calculated is $11,160, but it is presenting incorrectly. ???
  • 0
    Sure.

    Asset type "A," in service date of 1/15/16, purchase price of $19,953.83, TAX method of MA200, AMT method of MA150. 100% business use electing 50% section 168 bonus depreciation. 5 year life. Sage is calculating $9,976.92 of section 168 and $1,183.08 of regular depreciation. The grand total is accurate, but the split between 168 and regular is wrong.
  • 0
    The program is doing the calculation correctly on this asset. Here is why: Asset value of $19,953.83 multiplied by 50% equals $9,976.92 and that is the 168 bonus and part of depreciation included. The acquired value was not large enough to hit the max limit at one time therefore the depreciation is showing the remaining amount to hit the max limit of $11,160. I hope this helps. If you have an asset with a value of like $23,000 for example then the 50% bonus on that would be $11,500 which is higher than the limited depreciation that the asset is entitled to. The asset will then show $11,160 in the 168 allowance field.

    I hope this helps.
    ~Lovisa
  • 0
    The explanation helps but the presentation is wrong. Section 168 bonus depreciation on an auto is capped at $8,000. The amount showing as section 168 bonus should never exceed $8,000. The remaining $3,160 that is allowed should be showing as "regular" depreciation. Total depreciation should be $11,160, but the character should be split between $8,000 section 168 and $3,160 regular. With this presentation, to get an accurate total section 168 bonus number at year end will require manual re-totaling of the TAX and AMT depreciation expense reports. Otherwise the section 168 bonus total is overstated by $3,160 for every auto we put in service during 2016.

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