The Depreciation Module is accessible from four places in a tax return:
- Schedule C, for a sole proprietorship
- Schedule E, for rental property
- Schedule F, for a farm
- Form 2106 in the Adjustments menu, for employee business expenses
To add an asset to the depreciation module, open the depreciation module and select NEW. Input the following information.
- Description - Name or description of the asset.
- Date Placed in Service - This will be the date that the asset was first used for rental or business activities. It may be the purchase date or a later date.
- Cost - Includes the purchase price, sales tax and any delivery, set-up or closing costs.
- Business Percentage
- Federal Section 179 - Amount deducted under §179 in the year the asset was placed in service.
- State Section 179
- Accumulated Depreciation - Includes prior year Section 179 Depreciation and any other prior year depreciation.
- Depreciation Method - Select from the drop-down list. Most assets place in service after 1986 will use MACRS. When trying to decipher a depreciation schedule prepared by another preparer, remember that MACRS 200% is a double-declining balance (DDB or 200DB) calculation using a half-year convention (HY) for 3, 5 and 7 year property. If over 40% of the assets placed in service during a single year are placed in service during the fourth quarter, then mid-quarter convention (MQ) will be used instead of half-year.
For real estate depreciated over 27.5, 31.5 or 39 years, MACRS is a straight line (SL) calculation using a mid-month convention (MM).
Use Land for the non-depreciable portion of the lot or land that a depreciable building is attached to.
There are also options to select MACRS 150%. These options are often used when depreciating farming assets. They can also be used to avoid any AMT adjustments from accelerated depreciation.
IRS Publication 946 has tables for each of these depreciation options in Appendix A.
After you save the asset, you can edit additional information on the asset.
- 1. Description - Name or description of the asset.
- 2. Date Place in Service - This will be the date that the asset was first used for rental or business activities. It may be the purchase date or a later date.
- 3. Depreciation Method - Select from list. Most assets place in service after 1986 will use MACRS.
- 4. Cost - Includes the purchase price, sales tax and any delivery, set-up or closing costs.
- 5. Percentage of Business Use - Input based on actual use. If this is a vehicle marked as listed property, the percentage will be calculated using business miles/total miles.
- 6. Sec 179 Deduction - Amount deducted under §179 in the year the asset was placed in service.
- 7. Bonus Depreciation - Bonus or Special depreciation taken the year the asset was placed in service. The percentage allowed varies based on the year place in service. For 2026, Bonus Depreciation is 100% of the asset's cost.
- 8. Basis - Basis will be the Cost of the asset reduced by any §179 or Bonus depreciation taken in the year placed in service.
- 9. Accumulated Depreciation - Sec 179, Bonus depreciation and regular depreciation taken in prior years.
- 10. Depreciation Expense - The is the current year, regular depreciation. It uses the basis and the factor from the IRS table to determine the amount. This amount can be manually adjusted.
- 11. Federal Depreciation - This will be the amount calculated by TaxSlayer for the depreciation expense, before any adjustments.
- 12. State Depreciation - Clicking on this field will allow you to edit the State Section 179, mark if the state allows bonus depreciation and edit the state basis.
- 13. Mid-Quarter - If over 40% of assets during a single year were placed in service during the 4th quarter, then ALL assets placed in service that year need to be marked as Mid-Quarter or MQ. This means that the MACRS tables for Mid-Quarter convention will be used instead of the tables for Half-Year convention.
- 14. Listed Property - Mark Yes if this is listed property. Usually listed property is a vehicle.
- 15. Disposition - Mark Yes if this asset was sold or taken out of service in the current year.
- 16. AMT Adjustment Calculation - Information for calculating the depreciation under AMT rules.
TaxSlayer Pro strives to make the information on this page timely and accurate but makes no promise or guarantee about the timeliness, accuracy, or completeness of the contents of this page. This is general information and is not intended to be tax advice. You are encouraged to also review the underlying federal resources and publications.
Additional Information:
Desktop: Form 4562 - Depreciation and Amortization
Section 179 Deduction: How It Works and Annual Limitations
Section 179 Business Income Limitation