missed depreciation? please confirm

[Skate1968]

One individual never depreciated his rental property. When he sold his rental property in 2004 he used the cost basis reduced by the amount of depreciation which he was supposed to take. He lost the depreciation expense.

Now, November 2008, it is too late to amend his 2004 return. It is too late to file 3115. Generally speaking, it is now too late to go back and get that depreciation expense.

Am i correct?


thanks for reading

[erchess]

Bump

I believe that you are indeed correct but let's see if any of the creative minds on the board can come up with anything.

[Skate1968]

Thanks for responding, Erchess. I'm really unfamiliar with this area.

[Kram BergGold]

I agree, too late

I see no way for your client to get whole.

[Skate1968]

Thanks KBG.

[erchess]

I think

that the 04 preparer's E & O insurance should make the client whole.

[Skate1968]

Erchess,
This is an individual who used to argue loudly that he was much better off preparing his own tax reuturn. He's made made other major blunders also. He's an excellent example of why business owners should not attempt to prepare their own returns. (most of them. anyway)

I think that you or i would get sued if we prepared returns they way he did for himself.

[JohnH]

Yeah, but look at all those accounting fees he saved by doing it himself...

I'll bet he saved $2K in tax prep fees and it only cost him $5K in taxes. But he got $3K worth of education in the bargain, so he's even.

[Skate1968]

That education cost him more thant 3k. If you add all the years the he did NOT to take a home office deduction for what is clearly a contractor's workshop. (not feasable anymore now because he's looking to move)

Then there's the risks he put himself at for listing the wrong NIACS code. There is a good chance that his schedule C deductions were not consistent with the 'business type' that his missclassified himself as.

[JohnH]

I was just throwing numbers out to establish the pattern. Whatever the cost, I assume he must have decided at the outset that the education was worth it, since a savy investor surely wouldn't have done anything stupid like spend a dollar to save a dime - right?

[Skate1968]

Yeah, i guess he must have been thinking that at the outset.