Depreciation recapture - the later years

[Kea]

Lookig for the best way to handle:

Client purchased $500 software for his Sch C business in 2013.  In that year, he assumed it would remain 100% business.  Took Sec 179 (vs 3 yr amortize).  In 2014, business use dropped to 40% & depreciaton was recaptured. The basis should have been adjusted manually for 2014, but I didn't (did not have any work in 2015, so business use was $0 -- I didn't even think about the recapture.)

Now for 2016 business use is 40%.  Do I just override the basis now & contine deprecian for its last year?

Or, do I remove asset & expense remaining basis under de minimus safe harbor regs?

Thanks

[Pacun]

Do you use the software for personal use? If not, you just depreciate it while the company is open and waiting for clients.

[Kea]

Agree.  I explained that to the client.  So it seems he did use it personally while waiting for new clients.

Depreciation was already recaptured (and taxed) in 2014.  Not sure that it's an issue that I didn't adjust the basis in 2015 since the depreciation was $0 either way.

The income & tax implications are small but I just want to make sure it's recorded properly.

 

Thanks