Form 3115 Change Number

[AccTaxMan]

If a taxpayer is filing the Form 3115 without any 481 adjustments, what change number(s) should be entered on Part 1 question 1?

I have read you need a change number for the Safe Harbor De Minimis, a change number for the UOP, a change number to adopt the Materials and Supplies new rules, etc.

Is there an universal number to cover everything?

[Maribeth]

#184 - change to deduct amount paid for repairs or maintenance or change to capitalize amounts for improvements
#186 - change to deduct non-incidental supplies when consumed
#187 - change to deduct incidental materials & supplies when paid
#188 - change to deducting non-incidental rotable and temporary parts when disposed of
#189 - change to optional method for rotable and temporary parts
#192 - change to capitalize acquisition or production costs and, if depreciable, to depreciate such property
#193 - change to deduct costs of investigating acquisition of real property.

[AccTaxMan]

#184 - change to deduct amount paid for repairs or maintenance or change to capitalize amounts for improvements
#186 - change to deduct non-incidental supplies when consumed
#187 - change to deduct incidental materials & supplies when paid
#188 - change to deducting non-incidental rotable and temporary parts when disposed of
#189 - change to optional method for rotable and temporary parts
#192 - change to capitalize acquisition or production costs and, if depreciable, to depreciate such property
#193 - change to deduct costs of investigating acquisition of real property.

Is there enough space to enter all these numbers? I am not even sure if my tax program will take so many numbers in one slot. I hope we do not have to file one Form 3115 for each number.

Is there a consensus among tax professionals as to how it should be done?

[Sabre]

form 3115

The deminimis election is not on form 3115 but is a separate election which should be in your software.

Get on the brasstax.com web site and download Lisa's Correcting Depreciation Form 3115 booklet-it will very quickly answer the question you posed and is easily worth the $20 fee.

[Maribeth]

Is there enough space to enter all these numbers? I am not even sure if my tax program will take so many numbers in one slot. I hope we do not have to file one Form 3115 for each number.

Is there a consensus among tax professionals as to how it should be done?

I took a 3115 webinar from NATP which was fantastic. They indicate that for the property regs it is okay to submit one 3115 for all of the changes, ie, one 3115 for #186,#187, #189. You put "stment" in the code box and then detail out in your supporting statements the changes you are applying for.

And remember that the paper copy goes to Ogden, UT, not to Washington, DC.

We use Drake and Drake does not have the functionality to use more than one code yet. So we have templated up the 3115 and the supporting statements and will be attaching a pdf file to the efile. We will not take the time to try and create the 3115 within the tax software.

[AccTaxMan]

I took a 3115 webinar from NATP which was fantastic. They indicate that for the property regs it is okay to submit one 3115 for all of the changes, ie, one 3115 for #186,#187, #189. You put "stment" in the code box and then detail out in your supporting statements the changes you are applying for.

And remember that the paper copy goes to Ogden, UT, not to Washington, DC.

We use Drake and Drake does not have the functionality to use more than one code yet. So we have templated up the 3115 and the supporting statements and will be attaching a pdf file to the efile. We will not take the time to try and create the 3115 within the tax software.

Thank you Maribeth. I use Drake too. Looks like they are having their hands full to cope with all these new rule changes this year.

By the way, in post #2, you mentioned 7 codes #184, #186, #187, #188, #189, #192 and #192 to be put on Form 3115.

But in the latest post you only mentioned #186, #187 and #189. Are you talking about two different scenarios?

[TXEA]

Be careful not to elect an accounting method change unless there is an accounting method change. For example, few small business clients will need change 184. Don't change if you have deducted R & M in the past just because it is on the list. I guess if you have not capitalized your improvements, you might need 184. But most do.

The same goes for change 187. Who has not deducted their incidental supplies? I guess you might need 187 to meet the $200 criteria.

[Maribeth]

Thank you Maribeth. I use Drake too. Looks like they are having their hands full to cope with all these new rule changes this year.

By the way, in post #2, you mentioned 7 codes #184, #186, #187, #188, #189, #192 and #192 to be put on Form 3115.

But in the latest post you only mentioned #186, #187 and #189. Are you talking about two different scenarios?

No, just using an example if those were the changes you were changing to!

[AccTaxMan]

Be careful not to elect an accounting method change unless there is an accounting method change. For example, few small business clients will need change 184. Don't change if you have deducted R & M in the past just because it is on the list. I guess if you have not capitalized your improvements, you might need 184. But most do.

The same goes for change 187. Who has not deducted their incidental supplies? I guess you might need 187 to meet the $200 criteria.

For a business that has no 481 adjustment, but just filing the Form 3115 to adopt the new rules, which codes are needed?

...I know I have been asking dumb questions..please be bear with me.

[Maribeth]

For a business that has no 481 adjustment, but just filing the Form 3115 to adopt the new rules, which codes are needed?

...I know I have been asking dumb questions..please be bear with me.

None of your questions are "dumb". This is a complicated subject and I have been reading everything that I could find on the subject throughout this year.

I would use #184, #186, and #187. That would have you adopting the definition of an improvement, adopting the time for deduction of non-incidental materials and supplies, and adopting the timing for deduction of incidental supplies.

I had no 481(a) adjustment, and I added a prepaid supplies account to my balance sheet for the paper/pens etc on hand at the end of the year.

hth

[TaxGuyBill]

Yes, those are the codes to use if you think that EVERY business and rental needs to file a Form 3115.


Personally, I don't agree with it. The Paperwork Reduction Act in the Revenue Procedures say that the IRS is expecting less than 9,000 Form 3115s for 2014 because of the new Capitalization Regulations.

http://www.irs.gov/pub/irs-drop/rp-14-16.pdf#page=25

http://www.irs.gov/pub/irs-drop/rp-14-54.pdf#page=92

[TaxprepP]

None of your questions are "dumb". This is a complicated subject and I have been reading everything that I could find on the subject throughout this year.

I would use #184, #186, and #187. That would have you adopting the definition of an improvement, adopting the time for deduction of non-incidental materials and supplies, and adopting the timing for deduction of incidental supplies.

I had no 481(a) adjustment, and I added a prepaid supplies account to my balance sheet for the paper/pens etc on hand at the end of the year.

hth

What about the rest of the 3115 form? What other parts will be required to be answered for a business that has no 481 adjustment, but just filing the Form 3115 to adopt the new rules?

[TXEA]

None of your questions are "dumb". This is a complicated subject and I have been reading everything that I could find on the subject throughout this year.

I would use #184, #186, and #187. That would have you adopting the definition of an improvement, adopting the time for deduction of non-incidental materials and supplies, and adopting the timing for deduction of incidental supplies.

I had no 481(a) adjustment, and I added a prepaid supplies account to my balance sheet for the paper/pens etc on hand at the end of the year.

hth

Just curious why you would add a prepaid supplies account when you can elect the de minimus safe harbor to expense items under $500. Surely the pens a paper are under this amount.

[Maribeth]

What about the rest of the 3115 form? What other parts will be required to be answered for a business that has no 481 adjustment, but just filing the Form 3115 to adopt the new rules?

Part II must be filled out for all changes. Part IV must be filled out, even if you do not have a 481(a) adjustment. Attach a statement that details your changes from Part II.

NATP has a wonderful webinar on the 3115. If you are a member, or even if you are not a member, it is a good class to take and provides templates for you to use in preparing the 3115. It is only 2 hours long.

[Maribeth]

We purchased all of our paper supplies for tax season at the end of the year. Over $500.