Form 3115 Depreciation Adjustment

[WhiteOleander]

I'm asking this question for a friend in another office.

She is preparing the '08 return for a new client. (late). Client prepared their own '07 return. And of course it was not prepared properly. But, the client does not want to amend because the IRS is looking at prior years already.

So, the issue is concerning depreciation the client claimed incorrectly on the '07 return. He is running a Sch F. He did not put a barn he built in '07 into depreciation. So, now in '08, the preparer can't use the form 3115 to change the accounting method to adjust the deprec. because the '08 return is not a timely filed return.

So, can the form 3115 be filed next year with the timely filed "09 return? The preparer is a little but leary because the problem is known about on the '08 return.

[Corduroy Frog]

Error Correction

Oleander, is the barn oversight simply an error, or the result of an accounting change? I would think the 3115 would only apply if a change in depreciation methodology is encountered.

Going forward, as long as the client is not willing to amend the previous return and correct the error, I suppose I would consider the missing depreciation as "depreciable" and continue depreciating as if the depreciation had been properly taken in foregoing years.

[Gretel]

If my memory serves me right, I think you can use Form 3115 for a mistake in depreciation only if correction is needed for at least two years, maybe even 3 years, otherwise you have to amend the tax return.