New clients- reviewing past return

[JenMO]

Receive a couple of new clients this year, and looking over 2010, the preparer took the 50% and 100% depreciation on assets. Both clients didn't need the extra depreciation, because income was low, tax liability could have been reduced by just regular deprec or expensing off partially. Can I amend to save that extra deprec for future years? Why they didn't elect out of special depreciation, I can't figure out.

[JenMO]

Lookers, but no replies. Can I amend and elect out of 100% special depreciation?

[RitaB]

Receive a couple of new clients this year, and looking over 2010, the preparer took the 50% and 100% depreciation on assets. Both clients didn't need the extra depreciation, because income was low, tax liability could have been reduced by just regular deprec or expensing off partially. Can I amend to save that extra deprec for future years? Why they didn't elect out of special depreciation, I can't figure out.

Sounds like they were depending on the software and didn't have their head in the game. You may have to get permission from IRS, if I am reading this correctly. From Instructions to 4562:

"Election out. You can elect, for any class of property, to not deduct any special depreciation allowance for all such property in such class placed in service during the tax year.

To make an election, attach a statement to your timely filed return (including extensions) indicating the class of property for which you are making the election and that, for such class you are not to claim any special depreciation allowance.

The election must be made separately by each person owning qualified property (for example, by the partnership, by the S corporation, or by the common parent of a consolidated group).

If you timely filed your return without making an election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Write “Filed pursuant to section 301.9100-2” on the amended return.

Once made, the election cannot be revoked without IRS consent."

[sandigi]

If they had an extension on 2010 tax return, then amend

I found this on the bottom of page 9-17 The TaxBook:
"• An omitted election may be made on an amended return filed
within six months of the due date of the return (excluding extensions).
Write “Filed pursuant to section 301.9100-2” on the
amended return."

So, it looks like if they filed 2010 tax return by 04/18/11 (the normal deadline), you cannot amend. If they filed a 2010 year form 4868 for extension which gave them until 10/17/11 - then yes, you can amend as long as it is filed by 4/17/12.

[JenMO]

No, it was filed by 4-15. Yes, I believe the software did it, and the preparer didn't look at the whole picture. Any other options?

[Kram BergGold]

Your clients found the option

Your new clients availed themselves of their one other option. They got a new Tax Professional.

[sandigi]

Clever! I needed a smile . . . thanks.

[taxea]

I would go with trying to get authorization from the IRS to amend the return to correct the depreciation. I have never understood taking the elections when not needed.