Organizational/Start Up Cost Amortization

[taxedtothemax]

Have a client whose last year preparer set some assets up as organizational/start up costs and amortized on a 15 year basis. I want to amend the return and properly show these assets as depreciable business property. However, I read that the election, once made, is irrevocable. Am I stuck with this treatment since the election was made or am I able to amend and depreciate over the proper class life? Appreciate the help!

[Roland Slugg]

If the original return contained mistakes as to the proper classification or treatment of certain items, those mistakes can be corrected via an amended return. However, if the taxpayer made a legitimate election to treat a particular cost a certain way, and the item involved (and its cost) was validly subject to that election or treatment, then it probably can't be changed.

In the case you described, if the original return treated equipment as organizational costs, that was probably a classification error which can ... and should ... be corrected.

[taxea]

I agree. Amend to show non-depreciable items as startup costs and equipment as depreciable.

[taxedtothemax]

Thank you both for your help. Most appreciated!