User's Manual - Drake Software

Drake Software User’s Manual
Depreciation
The limitation occurs when the total of the expensed assets reaches the established
limit for the current year (again regardless of schedule).
To conform with IRS mandates, Drake reports section 179 expense on the first Form
4562 generated with the return. If multiple activities have section 179 expensing, a
section 179 summary is produced on the first Form 4562. (All additional 4562 forms
produced have only the “Section 179 expense deduction” lines completed.)
NOTE
Section 179 expense cannot be claimed on assets related to a passive
activity.
Indicating
Sec. 179
Expensing
Indicate section 179 expensing on the 4562 screen. In most cases, you do not have to
use screen 6, which contains override fields for Form 4562, Part I, Election to Expense
(Section 179). If screen 6 contains a section 179 expense override, clear that field and
enter the amount on the 4562 screen. The entry appears on Form 4562.
To expense the entire amount of an asset under section 179, select EXP as the depreciation
method. To expense only a portion of the tangible property under section 179,
enter all information as if depreciating the full amount, then enter the amount to
expense in the 179 expense elected this year field (Figure 5-53). An amount in this
field overrides system calculations.
Figure 5-53: On the 4562 screen, select EXP (1) to expense entire amount under section 179.
Use the 179 Expense fields (2) if expensing only a portion of the amount.
If the amount must be carried to a listed property, make an entry in the Listed Prop
Type field in the upper-right section of the 4562 screen. (See “Listed Property Type”
on page 166.)
IMPORTANT
For returns being prepared in Drake for the first time, the prior
section 179 expense must be entered manually for the
depreciation to be calculated correctly. In the future, the 179
expense allowed in prior years field (see Figure 5-53 on
page 167) will be updated based on system calculations.
Tax Year 2012 167