481 (a) Adjustment

[sami]

I have client who purchased rental property in 1991 for $125,000. She has never depreciated the property ever since. She made improvements of 60,000 over the years, but never depreciated them. She sold the rental for $445,000. Can I file Form 3115 and show 481 (a) adjustment in the year of sale or that is not allowed?

[Maude Lebowski]

You're good, Sami. That's exactly when/why you would file a Form 3115. Or at least one of the many reasons a Form 3115 could be required.

[spanel]

I have client who purchased rental property in 1991 for $125,000. She has never depreciated the property ever since. She made improvements of 60,000 over the years, but never depreciated them. She sold the rental for $445,000. Can I file Form 3115 and show 481 (a) adjustment in the year of sale or that is not allowed?

Are you 100% sure on that? A property purchased in 1991 would be fully depreciated by now anyway. Also some clients write off "improvements" as repairs. Without looking at the last 28years worth or returns, I would be hesitant to file a 3115.


Chris