Installment sale and recalculation of gross %

[origun]

Taxpayers sold a business property in 2003 with a lot and a building and we calculated percentage using information available. In 2008 there was a payoff with big tax consequences. Now taxpayers have consulted with previous accountant (in 1999) and found that they paid an additional $60,000 when a partnership was dissolved--which should be added to basis.

So...can I recompute the percentages in 2003 and amend beginning in 2005?

[JG EA]

I hope someone else has a better idea, but that does seem to me to be the only thing to do. If you had taken too much basis you'd have to amend and pay on the open years (and more if over 25% of AGI). It couldn't just be added on the end. So, I guess it can't be subtracted from the end either.

[origun]

Gross Profit Percentage

JG, thanks for your thought. As with you, I don't see any other way--and wasn't even sure I could do anything about it as it is so many years later. I do believe it was an honest mistake by my clients, not just a manufactured payment created out of the shock of their current tax bill--but you never know! They were hoping I could subtract the $60,000 from the payment received this year but that didn't sound right. I hope someone else will chime in with a thought of two!

[S T]

Difference

The additional $60K is material. You are beyond statue to amend on the 2003, but I wonder if you can use the form 3115? Just a thought, I don't really know.
Maybe someone else has some ideas.

Sandy

[origun]

I checked out instructions for 3115 and couldn't see how it would apply...but I'm no expert!

I realize it is too late to submit official amendments for 2003 and 2004...but can I do 2003 as a "background document" to compute the correct gross profit percentage and then use it to amend 2005-2007 for refunds and, especially, to use with the newly computed gross profit percentage on the 2008 return which has the big payoff?

I'm so afraid it's too late to do anything!!!!They aren't blaming me...but I do want to do the best I can for good clients who are basically honest (I think) and need as large a retirement nest egg as possible!