Unclaimed Depreciation-Form 3115

[ruthc]

I want to start depreciating a rental house the client lives in that was never depreciated (since 2003). I want to start for the 2011 return and then amend the 2009 and 2010. Will that cause any problems? I read form 3115 and really don't feel comfortable using it, and my tax software doesn't list that form. If I did use form 3115 can it be efiled with her return? I don't want to cause any delay in the refund by not using form 3115 if I should have used it.

[WhiteOleander]

Not sure I understand. Why are you depreciating a house the client lives in?

[ruthc]

Client owns rental house

My client has a 3 family apt house. She lieves in one of the apartments and rents out the other 2.

[JG EA]

Correcting Depreciation
Depreciation deductions can be corrected on an amended return
under certain circumstances. Consent from the IRS is
required to change a method of accounting. Use Form 3115 to
apply for a change in accounting method for depreciation. The
chart below outlines the circumstances for correcting depreciation
on an amended return and the situations requiring IRS
consent.

TTB 9-20

The chart there will help with your situation.

[Gretel]

I want to start depreciating a rental house the client lives in that was never depreciated (since 2003). I want to start for the 2011 return and then amend the 2009 and 2010. Will that cause any problems? I read form 3115 and really don't feel comfortable using it, and my tax software doesn't list that form. If I did use form 3115 can it be efiled with her return? I don't want to cause any delay in the refund by not using form 3115 if I should have used it.

I understand your hesitation using form 3115. Years ago, I have used it once and it was a pain. But you want to get all the depreciation going back to 2003. Consent from IRS for this type change is automatic. Also IRS only wants you to amend one year and otherwise use form 3115.

[mactoolsix]

No efile, but no problem

I want to start depreciating a rental house the client lives in that was never depreciated (since 2003). I want to start for the 2011 return and then amend the 2009 and 2010. Will that cause any problems? I read form 3115 and really don't feel comfortable using it, and my tax software doesn't list that form. If I did use form 3115 can it be efiled with her return? I don't want to cause any delay in the refund by not using form 3115 if I should have used it.

We have used 3115 a couple of times to claim depreciation never taken. We've never had a problem, however it cannot be e-filed. Be sure your "ducks are in a row" and you should have no problem getting the IRS to accept it.

Mike

[ruthc]

Expand please...

Please let me know if I am on the right track....Include just depreciation for 2011 on the return without the form 3115. Then amend the prior year with the form 3115. I looked over the instr and form 3115. Still unclear with it. Do I have to get a consent first before amending?

[S T]

Not an authority on this, as I have not completed the 3115 form - but I believe it is used in the year that you notice there is a "deficiency" in the depreciation and you can correct, then you do not have to amend prior years. ????

Here is a link to a post on it that might give you some assistance http://www.taxalmanac.org/index.php/...d_Depreciation provides some Rev Proc's to review

If you "google" form 3115 catch up depreciation there are also some other references. Just look for the most current dates.

Someone on TMI will more than likely "jump in" to give you more info - but in the meantime-------

Sandy

[Lion]

Automatic

Your situation on Form 3115 has automatic approval. And, as Sandy said, you use the form now that the problem has been discovered to catch up on all prior years. No need for amendments and no lost depreciation for closed years. Your client should think you're a hero. Charge accordingly!

[ruthc]

E-filing question

Thanks so much for the info. I have checked the form and the other site that helped. That sight also gives different answers depending on the responder. The form 3115 is not part of my tax software. I can download it and complete it manually, but how do I efile her return with this form? Also, won't this cause a problem with her Mass and CT return? Or will it flow thru the states without a problem? I thought the form 3115 had to be sent to the IRS. Should I have her send in the return rather than efiling? I am finally feeling more compfortable doing this with everyone's help.

[Gretel]

Here is a link with filing instructions for form 3115. I don't think it is ever meant to be attached to the current year's tax return but I DID NOT read everything.

http://www.irs.gov/instructions/i3115/ch01.html#d0e118

[Burke]

It looks to me like it says (1) file an original copy with the tax return (note prior poster said you cannot efile returns that include this form), and (2) file a copy with the National IRS office. As far as the two states mentioned, you would have to review their compliance with federal tax code to determine its effect on them. But I would say, you may not be able to efile them either due to this situation.

[ruthc]

Amended Return

I hate to continue on this subject, but I want to feel comfortable adjusting the depreciation on form 3115. I filed the 2011 return for the client without including any depreciation (even for 2011). I have read all the instructions for form 3115 and am still a little confused. I plan on amending the 2011 return (in May) to include all prior allowed depreciation. I will attach the form 3115 to it. I think I also have to send the form 3115 ahead of time for consent. Right? Has anyone ever done this before?
Thanks for any responses.

[Gretel]

I hate to continue on this subject, but I want to feel comfortable adjusting the depreciation on form 3115. I filed the 2011 return for the client without including any depreciation (even for 2011). I have read all the instructions for form 3115 and am still a little confused. I plan on amending the 2011 return (in May) to include all prior allowed depreciation. I will attach the form 3115 to it. I think I also have to send the form 3115 ahead of time for consent. Right? Has anyone ever done this before?
Thanks for any responses.

It's some years ago that I had to deal with one of them. Depreciation adjustments do not require consent, it's automatic. If memory serves right I do believe a copy of this form needs to be send to a second address at the time the tax return is filed.

[ruthc]

Thank you.

Thanks a lot for the info.