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Depreciation 101

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    Depreciation 101

    I have a new client who never depreciated her rental property. Can I just take this year's depreciation without filing Form 3115 for the prior years and a change in accounting method? The property is now part of her estate and will get a step up anyway so recapture is not an issue. I would like to claim this year's depreciation if the additional form is not required but I honestly do not know.
    Thanks for your help.

    #2
    50 people have viewed this. Does anyone have a response to my question?

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      #3
      I just answered you on the ProSeries forum where you asked this question, but I'll copy-and-paste my answer here too:


      If depreciation was not claimed for the prior two years, you technically are not allowed to claim the current year depreciation without Form 3115. In reality, the IRS probably would never care if you did.

      Does the taxpayer have any taxable income? If so, you would be cheating the taxpayer out of a deduction by not using Form 3115. Form 3115 can be used to 'catch up' on the missed depreciation, thereby lowering the current year taxes.


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        #4
        when selling this property, you must reduce basis by depreciation "allowed or allowable" so you need to fill out form 3115 then form 4797

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          #5
          Two people have responded and you have not yet thanked them......sorry, I couldn’t resist!
          Circular 230 Disclosure:

          Don't even think about using the information in this message!

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