Postpone Depreciation?

[Possi]

"like"

Figure out how much more their returns would've cost them with depreciation schedules for all those years. Double it. Charge that for Form 3115. Or triple it.

If this was Facebook, I would "LIKE" THAT QUOTE! Thanks for the guideline!

[Possi]

Others?

I don't know if it's your only option. But it will probably simplify the 3115 processing immensely.

I've never actually done one of these 3115s; it's on my to-do list. Personally, I'd consider getting the 2010 amendment off right away, being sure to include in the explanation a statement that the 3115 isn't required because it's only one year. Then do the 2011 with the 2003 3115. But I'm not prepared to guarantee that that's either right or most efficient.

Thanks, Gary. I have done several of these. They are a PITA, no doubt. But it looks fairly simple to total the missed depreciation on the 3115, and when breaking out the 2 properties' depreciation totals, detail the adjustments on the 1040 statement. It has to be mailed, so the statements will be clearly spelled out.

But, if consensus is that I do the 1040X for 2010, that's ok with me. More money for me anyway.

Anybody else care to weigh in? Would combining the 2 properties cause problems?

[taxea]

With those locations, it sounds like something they teach at boot camp.

I've seen one case where the taxpayer insisted he didn't want to take depreciation because he'd only have to pay it back when he sells (sort of true). But since the rental has been running as a loss, with other income too high for the $25K allowance, it's going to have no effect anyway. But danged if he can't get his head around the idea that the bookkeeping and reporting has to be done right regardless of the null effect on the bottom line.

not to mention he has to pay it back even if he doesn't take it!

I haven't run across the hairdresser's book. I my clients usually refer to the tax advice they received from "they and them" or the atty that does nothing to do with taxes.

[RitaB]

A long time coming

I haven't run across the hairdresser's book. I my clients usually refer to the tax advice they received from "they and them" or the atty that does nothing to do with taxes.

Yes, she does the hair of They and Them and Atty. Finally decided to set the record straight after hearing all the crap They and Them and Atty were spewing. I'm sure it will be the definitive source of thorns in our flesh as soon as she adds a few pop up pics of garbage bag donations. Maybe a free bottle of Big Sexy Bookkeeping.

[FEDUKE404]

Stranger than fiction

Definitely sounds like a PITA situation. I would let their "tax advisor" straighten out the mess.

You might also wish to whisper "allowed or allowable" to the client??

This reminds me of a scenario several years ago when I was reviewing some returns done at a store front tax prep firm. It seems the preparer (on her 2nd or 3rd year there?) was of the opinion that depreciation was, in fact, optional. (Well, actually, there is a strong probability the term "depreciation" never even crossed her mind in the first place. ) This preparer had worked up a Sch E, with several properties, and the relevant depreciation lines all showed zero. The office manager just about had a stroke......

FE

[Kram BergGold]

Options

First, for open years you can either use 1040X or 3115. It is your call. Closed years have to use 3115.

Second, Form 3115 can be prepared whenever you want to do it. So if the taxpayer was gaining no advantage from not claiming depreciation (the only way I can think of that would help him gain advantage is if it helped him get EIC) then I think you could continue to skip with the realization that upon the sale Form 3115 would have to be done. However, the slippery slope here is if you do that, maybe when he sells he won't come back to you. I am saying there is no requirement that Form 3115 be utilized immediatley upon discovery of a depreciation error. However, for a tax professional to not claim depreciation to increase EIC could be considered helping the client to defraud the government. So I would probably do 3115 sooner than later. But I don't feel you are legally required to do so.

[RightOn]

Home office plus filing multiple amended returns for refund...I think your client has to start preparing for an audit.