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My first 3115, r.e. investor and wrong depreciation

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    My first 3115, r.e. investor and wrong depreciation

    TP is an individual. Bought house in 2009, moved to another part of the country. Turned primary residence into a rental in 2013. Did own tax return. Knew nothing about depreciation. Began to learn it in 2014, filed 2013-2017 with incorrect depreciation (too much).

    When I'm reading/researching 3115 instructions it appears to me bar has been lowered repeatedly recently for mom & pop taxpayer regarding "correcting" this kind of thing. Especially when TP is beyond 3 years for amended returns (this case). To the point that I thought I read yesterday that a 3115 may not even be required for individual (1040) real estate rental errors. As long as is on small enough scale (number of properties). Just curious about your experience.

    Especially one of you who have done many over the years.
    Treasur2

    #2
    1) Nothing has really been 'lowered' for requiring Form 3115. It is still required *IF* there is a change in accounting method (but some of the procedures within Form 3115 are slightly simplified in some cases).

    2) If they used an incorrect Basis to claim too much depreciation, that is not a change in Accounting method, so Form 3115 is NOT used and the only thing to do is to amend the last three years.

    3) It MIGHT be possible that Form 3115 could be used in the year it was sold, but I don't see any point in doing that in your situation (if it is even allowable). The taxpayer will just pay the "Unrecaptured Section 1250 Gain" tax on the GREATER of (1) the amount of depreciation actually taken ("allowed") or (2) the amount of depreciation that SHOULD have been taken ("allowable"). So either way should have the same result in the year of the sale.

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      #3
      MFJ.

      I messed up and did not get both signatures on the same piece of paper (3115 signature page). Can I send in the second signature from the separate signature page?
      Treasur2

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