Can you amend to change to mileage method?

[LCP]

New taxpayer drives alot for business. Used the actual method last year.

That may have been a good idea then but it's killing her this year. Can we amend her 2007 return to use mileage both years?

[joanmcq]

What method did she use the first year she put the vehicle into use?

[LCP]

What method did she use the first year she put the vehicle into use?

Actual ..... that's why we'd need to amend that year.

[Fuzzy Faced Leader]

By using the actual method in 2007, you must have claimed depreciation. There are certain rules for correcting the depreciation. You may need to review Section 481 adjustments and file Form 3115. However, since you are not correcting the depreciation, but changing an election, this could be covered under changing elections in Reg 301.9000. IMHO a change of an election should be made if mistakes were made on the original return. Since you need to explain the reason for the amendment, you need to be more creative in your explanation, than you've given.

[WhiteOleander]

You can amend 2007 and change to actual if that is the first year that you used actual. You have not adopted an accounting method until you use it for two consecutive years. If the first year that actual was used was 2006, and it was then used also in 2007, you cannot amend and change the method. It has been adopted and you have to use form 3115 to change accounting methods.

[joanmcq]

This is why Sec 179/bonus dep, etc are not always the best thing to do with an auto.

[LCP]

You can amend 2007 and change to actual if that is the first year that you used actual. You have not adopted an accounting method until you use it for two consecutive years. If the first year that actual was used was 2006, and it was then used also in 2007, you cannot amend and change the method. It has been adopted and you have to use form 3115 to change accounting methods.

I like this answer!

So basically nothing would preclude us from amending the return and changing the way the auto expenses and depreciation was handled.

We didn't make an election of any sort that is binding and we don't have an established accounting method yet.

[David1980]

I like that answer as well, it's a nice answer for the taxpayer.

Although...

You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You cannot revoke the choice.

IRS Pub 463 bottom right of page 15.

[WhiteOleander]

I like that answer as well, it's a nice answer for the taxpayer.

Although...



IRS Pub 463 bottom right of page 15.

Thanks David. I guess I messed up on that.

[LCP]

I like that answer as well, it's a nice answer for the taxpayer.

Although...



IRS Pub 463 bottom right of page 15.

Darn!

Where would one go to find that rule in something "stronger" than a pub?

[LCP]

From the same Pub. 463 (top/left on page 17) ....... "If you claim either a section 179 deduction or use a depreciation method other than straight line in the year you first place a car in service, you cannot use the standard mileage rate on that car in any future year."


Why are they stating this? They've already stated that if you use actual the first year you cannot use mileage in subsequent years. Now they seem to be refining that rule to a situation where you use actual and specific depreciation methods. That would suggest that even if you used actual you could switch to mileage as long as you depreciated the car using straight-line the first year.

[Burke]

I agree. I found in the MTG (referring to IRC) that if you choose mileage in the first year the car has been placed in service, you have actively chosen to forego MACRS. This seems to support the above.