She can't *sue* you for an error SHE didn't find for 12 years....sheesh

I would fix my mistake for 16-17, and send her on her way.  There is NO way you'll ever make her happy.

So I just got an email for a seminar:

Depreciation Basics and Form 3115 - How to Report a Correction in Depreciation

The basics of depreciation of assets and Form 3115 how to correct depreciation errors, from not depreciating the assets correctly over the correct life or correcting basis of assets. We will also cover the time frame in which to submit the correction in order for it to be processed properly to IRS.

So I guess you CAN use 3115 to correct basis!

I know this is an old thread, but maybe you can help me. I discovered the same thing. My new client has a rental property that has a cost basis that includes the land value. It has been depreciated since 2012. Do I just change the amount of depreciation to the correct amount in the current year, or am I stuck with the cost basis that was filed for originally? The IRS gets their taxes back when the house is sold, so I don't think I need to amend prior year returns. Since form 3115 can't be used, I'm not sure what that means.... any help is appreciated.

I just ran into this too. Residential rental was depreciated with low basis. They sold in 2020. 3115 in year of sale would be nice but sounds unlikely.

Hi,

I made a similar error.  I made an error in depreciation for 2018, 2019, 2020.  Does this mean I can amend those three years?  I heard about form 3115 being needed if a change needs to be made prior to 3 years.  I then hear about the "2 year rule".  I am confused as to when the 3 years back start.  Essentially, I did it incorrectly for 3 years straight and was wondering if I need form 3115 or it is just a simple amendment?

Thank you.

---

@raynam7 wrote:

I made an error in depreciation for 2018, 2019, 2020. 

---

What exactly was the error?

Was the asset "placed in service" in 2018?

LISA,sometimes its not possible to leave on

agood note,its not something to beat

yourself up.you went above and beyond

what most of us would have done

regards,LARRY

stay safe

Hi, this asset was placed in service in 2009.  It is a rental property.  From 2009 to 2017, I was doing everything correctly but in 2018, I transferred to using turbotax to do my taxes.  Unfortunately, I entered in the WRONG basis in 2018, 2019, and 2020 thus triggering a WRONG depreciation expense for those three years (too much depreciation for each year).  I discovered it just now.  My confusion is whether I can 

a) Amend those three years and then move forward

b) Do a form 3115 because I messed up for 2 or more years

c) Something I don't know

I will note that I sold this property (well, 1031 exchange) in 2021 so I am wanting to fix this.  I now heard that since I sold it in 2021, I could correct everything for that tax year.  It is so confusing ... just not sure what to do.  

Thank you.

Amend.

Thank you.

So I don't need to do form 3115?

I did not "change the depreciation schedule" but I read that the IRS treats it as a change if you made a depreciation error two years in a row.

Just when I had a side issue about Form 3115, someone took that GMC DeLorean and cranked it to 88 mph to bring this thread back to the present.  Hello, Lisa. 

I didn't even looked at the original post date(s) and gave @TaxGuyBill  kudos when I read his comment:

Using an incorrect Basis is not a changing in accounting method (it is a "mathematical or posting error"), so Form 3115 can't be used (some people say it can be used in the year of the sale, but I'm still not convinced of that).

I totally agree with the comment.  Thus the kudos.

My burning question is, does statute of limitations work here, thus invalidating my kudos?

RE: I did not "change the depreciation schedule" but I read that the IRS treats it as a change if you made a depreciation error two years in a row.

The only comment I could make about the statement : I don't doubt you read that. 

Have a fantastic Sunday!!

---

@joshuabarksatlcs wrote:

 

My burning question is, does statute of limitations work here, thus invalidating my kudos?

---

It can offset any negative Kudos, but unfortunately if it is past the Statute of Limitations I won't be able to received any additional Kudos.   😂

Good thing that we both spelled it correctly.  One time when bourbon was at work, I typed

Statue of Limitations

The Bob jumped right in and squashed me.  But he was kind.  No purple font or all caps....

Thank you all for the lively discussion.  I will *attempt* to call the IRS and report back.

"I will *attempt* to call the IRS and report back."

Not Here, please.

"From 2009 to 2017, I was doing everything correctly but in 2018, I transferred to using turbotax to do my taxes."

This is not a TurboTax Community.

@raynam8 

You seem to be lost on the internet.

You’ve come to a Peer User community for Intuit Income Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte Tax Preparation programs, and you may be looking for support as an individual taxpayer using TurboTax. Please visit the TurboTax Help site for support.

And try this screen, for the various topics (subforums): https://ttlc.intuit.com/community/discussions/discussion/03/302

Your sign in user info here is the same one you can use over at the TurboTax forum.

Thanks.

@TaxGuyBill @Just-Lisa-Now- Bill just was reading about rev procedure 96-31 it is quite a bit of reading, but it seems you can now use this procedure to claim deprecation that you missed, and didn't claim all of the deprecation you should have. I guess you still file 3115, but it is automatically approved, but you have to state you are filing under rev prod 96-31. Here is a excerpt:

.01 Application of this revenue procedure. Except as provided in sections
3.02 and 3.03 of this revenue procedure, this revenue procedure applies to
any taxpayer changing to a permissible
method of accounting for depreciation
for any item of property that: (1) under
the taxpayer’s present method of accounting, the taxpayer has not taken
into account any depreciation allowance or has taken into account some
depreciation but less than the depreciation allowable (hereafter, referred to as
claimed less than the depreciation
allowable);

---

@Terry53029 wrote:

@TaxGuyBill @Just-Lisa-Now- Bill just was reading about rev procedure 96-31 it is quite a bit of reading, but it seems you can now use this procedure to claim deprecation that you missed, and didn't claim all of the deprecation you should have. I guess you still file 3115, but it is automatically approved, but you have to state you are filing under rev prod 96-31. Here is a excerpt:

.01 Application of this revenue procedure. Except as provided in sections
3.02 and 3.03 of this revenue procedure, this revenue procedure applies to
any taxpayer changing to a permissible
method of accounting for depreciation
for any item of property that: (1) under
the taxpayer’s present method of accounting, the taxpayer has not taken
into account any depreciation allowance or has taken into account some
depreciation but less than the depreciation allowable (hereafter, referred to as
claimed less than the depreciation
allowable);

---

A bit above your bold statement says "applies to any taxpayer changing to a permissible method".

Hi, were you able to find out how to deal with the situation you described?  I just ran into basically an identical situation where my client used the land value resulting in too much depreciation for several years.  Would appreciate any guidance!

No resolution yet.  Sorry. Looks more like just amending one by one, years back.

I am not an expert, but I would argue that it is a change in accounting method to reduce the depreciable property by the land value amount. Depreciating land is an incorrect method.

Therefore, I would file a 3115. I didn't end up filing this return, since I didn't have the professional software to submit it that year.

Here are my sources

https://www.msatp.org/fixing-the-error-how-do-we-solve-depreciation-mistakes/

https://www.eisneramper.com/knowledge-center/coronavirus-knowledge-center/depreciation-accounting-me....

https://bradfordtaxinstitute.com/Content/Fixing-Depreciation-Errors.aspx