No Depreciation was taken on room rental in taxpayer's home that was reported on Sch E for the last 10 years.
I'm their new tax pro and am taking catch-up depreciation 481(a) adjustment...
When filling out Form 3115, it asks the questions in Part II Line 4, "Did they taxpayer cease to engage in this business?"
Well, I think this (DCN 7) Automatic Form 3115 "Accounting Method" change with 481(a) adjustment is allowed EVEN if they ceased to engage in business--Anyone know for sure?
But I'm also not entirely sure whether to check "yes", he ceased to engage. Because this taxpayer had a bad experience with last tenant and evicted them in August 2015. After this he didn't try re-renting for the rest of the year (and still hasn't yet). But he's still open to renting if he can find someone he knows. But since he ceased actively trying to find renter, and this is a "do it by the book" taxpayer, I won't take depreciation or other expenses after the eviction.
In summary, should I mark box "Yes" for Part II Line 4? (That is: Yes, he ceased to engage in this "Business")
--And if I do--Can I still take the 481(a) Adjustment?... Thanks!!!!
I'm their new tax pro and am taking catch-up depreciation 481(a) adjustment...
When filling out Form 3115, it asks the questions in Part II Line 4, "Did they taxpayer cease to engage in this business?"
Well, I think this (DCN 7) Automatic Form 3115 "Accounting Method" change with 481(a) adjustment is allowed EVEN if they ceased to engage in business--Anyone know for sure?
But I'm also not entirely sure whether to check "yes", he ceased to engage. Because this taxpayer had a bad experience with last tenant and evicted them in August 2015. After this he didn't try re-renting for the rest of the year (and still hasn't yet). But he's still open to renting if he can find someone he knows. But since he ceased actively trying to find renter, and this is a "do it by the book" taxpayer, I won't take depreciation or other expenses after the eviction.
In summary, should I mark box "Yes" for Part II Line 4? (That is: Yes, he ceased to engage in this "Business")
--And if I do--Can I still take the 481(a) Adjustment?... Thanks!!!!