Question - Form 3115

[rkhan71]

Any help with the following would be appreciated:

TP has been doing own tax return for several years, but noticed that Turbo Tax was only taking 75% of rented home as depreciation. It should be 100%; he wants to amend and correct to 100% use. Of course he wants my help preparing the amendment. The amending part is straightforward, but I want to know if it requires a form 3115 "change in accounting method" as part of the amendment? Any safe harbor for form 3115 use, or not necessary at all? He is a MFJ. His motivation and will need to do anyway (change his depreciation percentage) is that he is not taking 100% as he should, and would like to receive more potential refund (2015 filing) from taking more depreciation.

Appreciate, as always, all thoughtful recommendations and considerations.

Thanks in advance.

RFK

[TaxGuyBill]

It is a "mathematical or posting error", not a "change in method of accounting".

Therefore, Form 3115 can not be used, and you can only amend to correct the open years. Nothing special needs to be done to amend.

For his current-year filing, just be sure to enter the proper "prior depreciation" that was taken, after the amendments.

[mactoolsix]

Any help with the following would be appreciated:

TP has been doing own tax return for several years, but noticed that Turbo Tax was only taking 75% of rented home as depreciation. It should be 100%;
RFK

I'm curious why he feels he should be getting 100% depreciation - is there no land? Even a condo usually has some land value.

[FEDUKE404]

Why a reduced value ?

I'm curious why he feels he should be getting 100% depreciation - is there no land? Even a condo usually has some land value.

Good question! Turbotax will not just "take" 75% of depreciation without a reason of some kind.

GIGO

FE

[taxmom34]

did this client give you a copy of the depreciation worksheet? turbo tax has a very detailed worksheet that will show the cost, and land value is subtracted and amount left if 100% rental. when I used turbo tax it was because I wanted the worksheet for rental properties . I no longer use turbo tax I am not a paid preparer anymore.

[rkhan71]

Thanks for the infomration

Thanks for the comments.

I had not really gotten into the "thick of details," just the major question from his thought - what to do about 75% versus 100%, as applicable for depreciation taken. Whether 75% is the net value of land, I do not know yet. Maybe it is. But since TaxGyBill mentioned his thoughts, I think that is what I will follow. I was not sure of the need for form 3115, if at all. He can just adjust in 2016 filing in his records, as appropriate.

Thanks again to the group! You folks are always great help in a pinch!

RFK

[FEDUKE404]

Details might be somewhat important

Thanks for the comments.

I had not really gotten into the "thick of details," just the major question from his thought - what to do about 75% versus 100%, as applicable for depreciation taken. Whether 75% is the net value of land, I do not know yet. Maybe it is. But since TaxGyBill mentioned his thoughts, I think that is what I will follow. I was not sure of the need for form 3115, if at all. He can just adjust in 2016 filing in his records, as appropriate.

Thanks again to the group! You folks are always great help in a pinch!

RFK

Ah. . . .I believe you might want to "check the details" before you start amending tax returns for any past years. . .

Separate from client's "thought."

BTW: Remember depreciation is "allowed or allowable."

FE