I have a new client who did not file their 2019 tax return. They sold a rental in 2019 that they purchased in 2004. The wrong depreciation was claimed. Began working on 3115 to attach to the 2019 tax return to claim an 481 adjustment for depreciation in the amount of 129,999. Then I read the instructions for form 3115 and it says you can only file late if you have unusual or compelling circumnstances. If we can get this accepted it will save the client $45,000 in Federal and State Tax. Anyone have experience filing a late form 3115? And if yes how much does the private letter ruling cost? And do you have to file for the ruling first and then send the tax return in or both at the same time? Thanks for any help on this topic!
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Originally posted by GTS1101 View Post
First thing: Does this qualify for 3115? "Wrong depreciation claimed" does not necessarily mean that an "Impermissible Method" was used. It very well could just be a "mathematical or posting error", which does not qualify for Form 3115.
*IF* it was an "impermissible method" that qualifies for Form 3115, technically you are correct, you can NOT file it with a late return. BUT, changing impermissible depreciation to a permissible method on a DISPOSED property (change #107) is one of the few circumstances that allow you to file it with an AMENDED return. So you would need to file the return without depreciation, then later amend it adding the correct current-year depreciation and with Form 3115 to 'catch up' on the missed depreciation.
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Thank you Bill! Appreciate your help!Comment
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