Should You Enter Depreciation from the Trial Balance in UltraTax CS?
No. The asset module computes depreciation and produces Form 4562, so a book depreciation figure entered or tax coded into a deduction field deducts the same expense twice. Enter the assets, let UltraTax calculate, and treat the difference between book and tax depreciation as a Schedule M-1 adjustment.
- Asset tab
- Asset module
- Add or edit assets
| Trial balance account | UltraTax CS screen and field | Lands on |
|---|---|---|
| Depreciation expense, per books | No tax code, no deduction field | Schedule M-1 book to tax difference |
| Fixed assets | Asset module | Form 4562 and Schedule L line 10a |
| Accumulated depreciation | Asset module, flowing to the balance sheet | Schedule L line 10b |
| Beginning accumulated depreciation | Prior year return or depreciation schedule | Schedule L line 10b, beginning column |
| Asset disposed | Record the disposal in the asset module | Form 4797 and Schedule L |
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Try it freeShould You Enter Depreciation from the Trial Balance in UltraTax CS? on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense (the account this page is about) | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Depreciation expense | 21,500.00 | |
| Accumulated depreciation | 21,500.00 |
The tax code you should not assign
UltraTax maps accounts to the return through tax codes, and the temptation on a depreciation expense account is to code it like everything else.
Do not. The asset module already computes depreciation and produces Form 4562. A coded book figure arriving in a deduction field as well deducts the same expense twice, with no diagnostic, because both numbers are individually plausible.
The assets are the input
The asset module holds cost, date placed in service, method, life and any section 179 or bonus election. From that UltraTax produces the deduction, Form 4562, and the fixed asset figures on Schedule L.
So the fixed asset lines on the balance sheet are downstream of the asset module. Typing equipment or accumulated depreciation onto Screen L competes with the module rather than correcting it, and that disagreement is a frequent reason a balance sheet will not tie.
Beginning accumulated depreciation on a new client
It is not on the current year trial balance, because the trial balance shows this year's expense rather than the accumulated total at the start of the year.
It comes from the prior year return or the depreciation schedule, and it is the most commonly omitted figure on a first year engagement, in every tax package.
Disposals
Record the disposal in the asset module so the cost and the accumulated depreciation come off together and the gain or loss reaches Form 4797. Removing the asset without recording the disposal leaves the balance sheet moving with nothing to explain it.
A useful warning sign on any trial balance: accumulated depreciation close to or above the gross asset total usually means disposals have not been recorded properly for several years.
The difference is supposed to exist
Book depreciation uses whatever life and method the client's bookkeeping chose. Tax depreciation uses MACRS with section 179 and bonus. They will not match, and the difference belongs on Schedule M-1.
Forcing agreement in either direction destroys information and gains nothing on the return.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Page 1 line 20 from Form 4562, with the difference on Schedule M-1 |
| Form 1120S | Page 1 line 14 from Form 4562 |
| Form 1065 | Page 1 line 16a from Form 4562 |
Common questions
Should I assign a tax code to the depreciation expense account?
No. The asset module computes depreciation and produces Form 4562. A tax coded book figure landing in a deduction field deducts the same expense twice, and nothing in the return flags it.
Where do the Schedule L fixed asset figures come from in UltraTax?
From the asset module. Entering equipment or accumulated depreciation directly on Screen L sets up a conflict between the module and the balance sheet, which is a common cause of an out of balance Schedule L.
Where does beginning accumulated depreciation come from?
The prior year return or the depreciation schedule. It is not on the current year trial balance, which shows only the current year expense, and it is the figure most often missed on a first year client.
Do book and tax depreciation need to agree?
No. The books use a chosen life and method while the return uses MACRS with section 179 and bonus depreciation. The difference is a Schedule M-1 adjustment and should be left as one.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 17, 2026.