Depreciation Disaster

[jasdlm]

Client has been doing his own taxes on turbo tax. Wife died in early 2007 and he came to me. Now I am doing taxes for 2007. He has been filing a Schedule F (Horses) every year. The years I have copies of show $12,000 to $16,000 losses and 0 income. This year he actually has $1200 income from a horse sale. However, after discussion, he has decided that it really is a hobby, he has no intention of working hard enough to make a profit, etc., so I am trying to convert the assets to personal use.

Problem(s): He can't get turbotax to give him a depreciation schedule (which means nothing to him, anyway). What I was finally able to get was a list of the 4 assets on the schedule, the date each was placed in service, the original basis, and the depreciation allowed for the 2006 tax year. It reads as follows:

ArtCat Sprayer 7/1/2003 $6,662 $1,110

Metal Building 6/1/2005 $33,594 $6,427

Breeding Stock 10/08/2005 $490 $184

Computer 2/1/2000 $2,162 0

The computer is easy. I think I can figure out the ArtCat Sprayer (don't even know what one is, but I hope it has a 5 year class life). I'm struggling with the metal building. How could the depreciation be $6,427 in 2006? I'm not sure how to enter this.

Breeding Stock. Not sure what to do here, either. He has no idea what animals are included in this category. (I think his wife must have done the return.) I really don't think client can give me any more information.

Any suggestions? I haven't done this before, and I'm pretty confused.

Thanks.

[BulldogTom]

How about amending 2005 and 2006 first, then proceed with 2007 without the complications. If it is a hobby, those losses are going bye-bye anyway. Proceed with 2007 as if they don't exist.

Tom

Lodi, CA