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Message
New Accountant Needs Help: § 179 Depreciation Deduction
Posted on 2/14/14 at 4:07 pm
Posted on 2/14/14 at 4:07 pm
I just started at a CPA firm a couple of months ago and have only been doing tax returns for two weeks now. Needless to say, I’ve realized that I learned nothing in school and have utterly no clue what I’m doing. My boss is really beginning to lose his patience with me and I’m worried I’ll be fired soon if I don’t get it together in a hurry.
On Tuesday, he told me to do the tax return for one of our clients, a construction company. The only new asset the company acquired this year was a 2014 F350 on November 29, 2013. He told me that before I do the tax return, I’m to make a depreciation schedule for the truck and then an adjusting journal entry in QuickBooks to reflect it. I have never heard of Section 179 until now and have been trying to teach it to myself. I just looked at all the MACRS charts to try and figure this thing out and now I’m more confused than ever! What is the formula I should use? What should my journal entry look like? What should my depreciation schedule look like? Someone please explain this to me like I'm 3.
Here is what I think I’ve determined thus far:
Since the truck is considered a heavy vehicle (over 6,000 lbs.), I can only take a Section 179 deduction of $25,000? Since it is a vehicle, it has a depreciable life of 5 years? Since it was purchased on November 29th, I should use mid-quarter convention on the 5 Year MACRS chart of 5%?
Is any of this sounding right? If so, now what do I do with all of this information to make the depreciation schedule and adjusting journal entry. We use Pro System for tax returns, so I went on the Form 4562 and typed in the date, the truck was purchased, that it had a life of 5 years, and that the guy paid $38,501 for it, then the system spit out all these #’s on the depreciation schedule and I have no clue how they were arrived at. (See attached image where hi-lighted. Ignore red marks.)
When I went to my boss and showed him the depreciation schedule and my adjusting journal entry and what my balance sheet looked like, he became extremely annoyed and told me to pack up my stuff and go home and not to think about coming back through his office doors until I fully understand depreciation. Well, I’ve been out of the office for two days now, due to the office being closed for a snow storm. I’m almost certain the office will be open tomorrow and I STILL have no clue what I’m doing. I think he may fire me tomorrow if I don’t know how to fix this. HELP!!!!
On Tuesday, he told me to do the tax return for one of our clients, a construction company. The only new asset the company acquired this year was a 2014 F350 on November 29, 2013. He told me that before I do the tax return, I’m to make a depreciation schedule for the truck and then an adjusting journal entry in QuickBooks to reflect it. I have never heard of Section 179 until now and have been trying to teach it to myself. I just looked at all the MACRS charts to try and figure this thing out and now I’m more confused than ever! What is the formula I should use? What should my journal entry look like? What should my depreciation schedule look like? Someone please explain this to me like I'm 3.
Here is what I think I’ve determined thus far:
Since the truck is considered a heavy vehicle (over 6,000 lbs.), I can only take a Section 179 deduction of $25,000? Since it is a vehicle, it has a depreciable life of 5 years? Since it was purchased on November 29th, I should use mid-quarter convention on the 5 Year MACRS chart of 5%?
Is any of this sounding right? If so, now what do I do with all of this information to make the depreciation schedule and adjusting journal entry. We use Pro System for tax returns, so I went on the Form 4562 and typed in the date, the truck was purchased, that it had a life of 5 years, and that the guy paid $38,501 for it, then the system spit out all these #’s on the depreciation schedule and I have no clue how they were arrived at. (See attached image where hi-lighted. Ignore red marks.)
When I went to my boss and showed him the depreciation schedule and my adjusting journal entry and what my balance sheet looked like, he became extremely annoyed and told me to pack up my stuff and go home and not to think about coming back through his office doors until I fully understand depreciation. Well, I’ve been out of the office for two days now, due to the office being closed for a snow storm. I’m almost certain the office will be open tomorrow and I STILL have no clue what I’m doing. I think he may fire me tomorrow if I don’t know how to fix this. HELP!!!!
This post was edited on 2/14/14 at 4:09 pm
9
Posted on 2/14/14 at 4:35 pm to Type A
I wish I could help. I know how you feel though.
Have you literally been in the industry for only a couple months? I'm not a savvy accountant but that seems unrealistic that your boss is getting THAT upset over someone who has zero experience. I would think that there would be some leeway considering your newness.
Have you literally been in the industry for only a couple months? I'm not a savvy accountant but that seems unrealistic that your boss is getting THAT upset over someone who has zero experience. I would think that there would be some leeway considering your newness.
Posted on 2/14/14 at 4:58 pm to Type A
You need to find another job
I worked for a guy like that for about a week before i walked out of the office and told him to frick off
I worked for a guy like that for about a week before i walked out of the office and told him to frick off
Posted on 2/14/14 at 5:03 pm to Type A
I'm guessing this is a really small firm if there is no one else you can ask for guidance from in the office?
Posted on 2/14/14 at 5:05 pm to Type A
quote:
My boss is really beginning to lose his patience with me and I’m worried I’ll be fired soon if I don’t get it together in a hurry.
Been there. Got the t-shirt.
Posted on 2/14/14 at 6:55 pm to Type A
Got desperate and went to the OT? Yikes...
Sorry, I'm of absolutely no help. Tax was my worst accounting course in college.
Sorry, I'm of absolutely no help. Tax was my worst accounting course in college.
Posted on 2/14/14 at 8:49 pm to Type A
There is so much missing information that all you are going to get are suggestions rather than a definitive answer. What is your goal? Do you want to maximize deductions for your client? If so, then you can possibly claim Section 179 expense for the entire cost of the truck. As long as the truck weighs more than 6,000 lbs and the interior length of the bed is at least 6 ft you are not limited to $25,000 of Section 179 expense.
Your boss is being a dick by asking you to prepare a depreciation schedule. That is what the Form 4562 features of your tax prep software are for. Most accountants enter the depreciation information and let the software do the calculations. Then they determine the adjusting journal entries to account for any book to tax differences. It's a matter of efficiency.
You appear to have everything entered properly except for the Sec 179 limit. You want to let the software know that you are eligible for the 50% bonus depreciation and that your method would be MACRS 5yr with the mid-quarter convention applying. This will allow the software to determine any Sec. 179 recapture should the truck be disposed of within its recovery period.
Your boss is being a dick by asking you to prepare a depreciation schedule. That is what the Form 4562 features of your tax prep software are for. Most accountants enter the depreciation information and let the software do the calculations. Then they determine the adjusting journal entries to account for any book to tax differences. It's a matter of efficiency.
You appear to have everything entered properly except for the Sec 179 limit. You want to let the software know that you are eligible for the 50% bonus depreciation and that your method would be MACRS 5yr with the mid-quarter convention applying. This will allow the software to determine any Sec. 179 recapture should the truck be disposed of within its recovery period.
Posted on 2/14/14 at 8:58 pm to Type A
Wow, so you are a female and your boss is treating you like that. I didn't see thread on OT. 
Posted on 2/15/14 at 12:05 am to Type A
I posted this in the OT thread, but I believe it went unnoticed. Section 179 is an IRS rule and not a GAAP rule. Therefore, you CAN NOT book that whole amount in your journal entry into QB. You need to run a regular 5-yr MACRS calculation (or whatever the client's method of depreciation is) and book that amount as depreciation expense and accumulated depreciation. This will result in a temporary difference until the asset is fully depreciated.
Impress your boss and mention that this is covered in FIN 48. Them tell him to DIAF for being a dick.
And get out of public accounting before you lose your sanity and your eyesight. I and the voices in my head know from experience. Trust us.
Impress your boss and mention that this is covered in FIN 48. Them tell him to DIAF for being a dick.
And get out of public accounting before you lose your sanity and your eyesight. I and the voices in my head know from experience. Trust us.
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