Catch up for Stepped Up Basis Depreciation

[momnieboyd]

My client's husband passed away in 2011. They owned several rental properties together, of which she became the sole owner on his death. The Stepped Up depreciation has not been taken to date. The TaxBook states that if depreciation deducted is less than the allowable amount, the difference is accounted for in the year of change and is referred to as a "negative IRC section 481 adjustment" and can be taken as an "Other expense" in the year of change. Has anyone dealt with this? Do you believe the Form 3115 needs to be completed or can I "catch-up" the depreciation on the current year return?
Thanks in advance for your help!
PB

[taxea]

amend the returns from the year of change (2011). I do it by depreciating the difference as a separate item. Be sure to create a separate return for the amended and to transfer the amended return forward or the additional depreciation will not transfer. Do this for each amended return until you get to the current year.

[Gretel]

My client's husband passed away in 2011. They owned several rental properties together, of which she became the sole owner on his death. The Stepped Up depreciation has not been taken to date. The TaxBook states that if depreciation deducted is less than the allowable amount, the difference is accounted for in the year of change and is referred to as a "negative IRC section 481 adjustment" and can be taken as an "Other expense" in the year of change. Has anyone dealt with this? Do you believe the Form 3115 needs to be completed or can I "catch-up" the depreciation on the current year return?
Thanks in advance for your help!
PB

Welcome to the board. You will need to file form 3115, a bit of a pain, I will need to do 2 myself this year. You might want to look at previous posts regarding this topic - do a search for "3115", several posts will pop up.

[BHoffman]

I agree with Gretel. Form 3115 instead of amended returns.