Question

Turbotax not allowing me to fully deduct software development cost

Forum|Forum|1 year ago
March 20, 2025
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I have a partnership between a friend and I to develop a smartphone application. We paid a developer to work on the software and have been depreciating it yearly. However, we are closing the LLC and I am filing the final tax return for 2024. There is about $20k in residual value yet to be depreciated. My CPA (who only does my personal taxes), told me I should be able to accelerate the depreciation of the rest of the asset in the final year (2024) and take the remaining $20k deduction. However, turbotax business only allows me to deduct $4-5k which is what it calculates based on a 5 year depreciation cycle even though I indicated this is my final tax return. How do I change that? There doesn't seem to be a manual option.

TurboTax Business Windows

PatriciaV

You are correct. There is no manual entry for depreciation in TurboTax.

To claim the remaining basis for the asset, report that you no longer use it for your business. Report a Sales Price of zero. You will receive the depreciation expense as usual for the year and a long-term capital loss for the remaining basis on Form 4797. You can track the calculations for these two items on the Asset Entry worksheet in Forms Mode, under Dispositions.

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R

rhatamAuthor

Actually, I had amortized the software initially over 5 years. I tried entering a sales price of 0. If I was amortizing, I noticed that I can change the amortization time frame down to 3 years and it then allows me to take the remainder as a loss this year in the final year.