I have a question about how to map depreciation expense accounts in Quickbooks to tax software.
In Quickbooks we maintain two separate expense accounts for depreciation:
Current Year Depreciation Section 179 Allowance
We calculate the depreciation using a third party fixed asset application that is much nicer and much more detailed than our tax software Lacerte. We then post the depreciation as a single number into Quickbooks, and that is the number we want to draw into the tax software.
When I go to look at the Tax Line Mapping for expense accounts in Quickbooks, there is no depreciation line. I see something that is tangential which is: "Schedule M-1: Depreciation per books". First, can someone explain what that is and how tax software might use that? Is it going to map correctly to tax software depreciation on form 4562, or is that entry only going to be used for comparison purposes on M1 (i.e., comparing book versus tax depreciation) against a depreciation number you are left to develop independently inside the tax software.
It really looks like Quickbooks did not think about this carefully enough. Clearly not everyone wants to list fix assets and do depreciation inside of tax software.
An alternate way I see to do this is to map the depreciation accounts to "Other Deductions" and then inside the tax software manually map the depreciation accounts in the trial balance when mapping to an appropriate account in the tax software. That seems awfully manual and would be prone to errors in future years if the operator did not follow a strict procedure, which we would need to create.
I am hoping to find an automatic method for import, and I'm holding out some hope that others can explain the schedule M-1 mapping and if that is likely to work here.
nish